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Ahead of Market: 12 things that will decide stock action on Tuesday

MUMBAI: Nifty50 formed a spinning top formation on the daily chart on Monday, which is indicative of the indecisiveness among traders following a gap-up start to the session.

Here’s how analysts read the market pulse:

Gaurav Ratnaparkhi, Head of Technical Research, Sharekhan by BNP Paribas said Nifty50 extended beyond the 50 per cent retracement of the fall from 18,604 to 17,613; however, it stumbled near the 61.8 per cent retracement.

Mazhar Mohammad of said that to retain positive momentum Nifty50 should manage to get past 18,210 levels in the next one or two trading sessions without violating 17,900 levels on the downsides as a below 17900 can aid the bears in establishing upper hand.

That said, here’s a look at what some of the key indicators are suggesting for Tuesday’s action:

Tech cos lifts Wall Street

U.S. stock indexes were buoyed by technology stocks on Monday as concerns over rising inflation saw investors shift to economically resilient sectors ahead of major retail earnings and data this week. At 09:56 a.m. ET, the Dow Jones Industrial Average was up 94.58 points, or 0.26%, at 36,194.89 and the S&P 500 was up 12.80 points, or 0.27%, at 4,695.65. The Nasdaq Composite was up 47.24 points, or 0.30%, at 15,908.20.

European shares trade mixed

UK’s FTSE 100 recovered from early losses to end flat on Monday, as miners struggled due to global moves to reduce coal use and a big drop in China’s steel production, offsetting gains in Royal Dutch Shell following plans to ditch its dual-share structure. Broader STOXX Europe 600 index climbs 0.26% higher.

Tech View: Rangebound action likely

Analysts said that the indecisive candle formation suggested that Nifty50 will likely face resistance at 18,150-18,200 points as per the concept of polarity. Given such stiff resistance, analysts did not rule out the possibility of rangebound action going ahead.

F&O: Sideways movement seen likely

In the derivatives segment, traders aggressively sold out-of-money call and put options of the Nifty50 index indicating that they expect the market to move in a narrow range going ahead. The 18,200 strike price call option saw aggressive selling from traders suggesting that the level will act as a stiff resistance.

Stocks showing bullish bias

Momentum indicator Moving Average Convergence Divergence (MACD) showed bullish trade setup on the counters of ITC, Ashok Leyland, IFCI, Indian Energy Exchange, and Bharti Airtel.

The MACD is known for signaling trend reversals in traded securities or indices. When the MACD crosses above the signal line, it gives a bullish signal, indicating that the price of the security may see an upward movement and vice versa.

Stocks signalling weakness ahead

The MACD showed bearish signs on the counters of Manappuram Finance, M&M Finance, Bank of India, SJVN, and Bharat Forge. A bearish crossover on the MACD on these counters indicated that they have just begun their downward journey.

Most active stocks in value terms

PG Fintech (Rs 4334 crore), IRCTC (Rs 1940 crore), Zomato (Rs 1859 crore), Apollo Hospitals (Rs 1540 crore), Tata Steel (Rs 1531 crore), HDFC (Rs 972 crore), Axis Bank (Rs 943 crore), Tata Motors (Rs 918 crore), ITC (Rs 917 crore) and ICICI Bank (Rs 850 crore) were among the most active stocks on Dalal Street in value terms. Higher activity on a counter in value terms can help identify the counters with the highest trading turnovers in the day.

Most active stocks in volume terms

Zomato (Shares traded: 12.1 crore), Vodafone Idea (Shares traded: 11.3 crore), YES Bank (Shares traded: 4.8 crore), ONGC (Shares traded: 4.6 crore), ITC (Shares traded: 3.9 crore), NALCO (Shares traded: 3.7 crore), PB Fintech (Shares traded: 3.7 crore), Tata Power (Shares traded: 3.3 crore), and PNB (Shares traded: 2.9 crore) were among the most traded stocks in the session.

Stocks showing buying interest

PB Fintech, Suprajit Engineering, Fine Organic Industries, Asahi Ind Glass, Metropolis Health and Thermax witnessed strong buying interest from market participants as they scaled their fresh 52-week highs, signaling bullish sentiment.

Stocks seeing selling pressure

Aegis Logistics, Granules India, and P&G Health witnessed strong selling pressure and hit their 52-week lows, signaling bearish sentiment on these counters.

Sentiment meter favours bears

Overall, the market breadth remained in favour of the bears. As many as 192 stocks on the BSE500 index settled the day in the green, while 308 settled the day in the red.

Podcast: Why are global brokerages downgrading Indian Equities?
The BSE barometer Sensex gyrated in the range of 440 points. The benchmark index hit 61,000 mark during the day, but settled just about 60,700 after gaining only 32. Its broader peer, Nifty50, ended the day 100 points below the day’s high at 18,110, adding merely 7 points. Index hit 18,200 level during the but could not hold on to the gains. Broader markets ended the day mixed. BSE midcap index ended the day in green, whereas BSE smallcap index settled marginally lower. Fear gauge India VIX gained 2 per cent. Why are global brokerages downgrading Indian Equities? Should investors be cautious about it?

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