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

MUMBAI: Nifty50 on Monday formed a Doji-like candle on the daily chart as the benchmark index closed higher for the sixth consecutive session. The formation of a Doji-like candlestick is an indication of indecisiveness among traders about Nifty50’s ability to cross the 18,500 points level.

Here’s how analysts read the market pulse:

Gaurav Ratnaparkhi of Sharekhan said the short-term momentum indicators have been pushed into the overbought zone and that they need to cool off to create further room on the upside.

Mazhar Mohammad of said that today’s gap up was the fourth one from the corrective swing low of 17,452 level registered on October 1 from where this entire leg of upswing unfolded. “With this run-away upmove of almost 1,100 points in just 10 sessions, the market might have reached a point where consolidation looks inevitable,” he said.

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

Wall Street falls on slowing China growth

Wall Street’s main indexes fell on Monday as economic growth in China slowed, while a relentless surge in oil prices fueled concerns about elevated inflation. Data showed China’s economy hit its slowest pace of growth in a year in the third quarter, hurt by power shortages and wobbles in the property sector. The Dow Jones Industrial Average fell 19.06 points, or 0.05 per cent, to 35,275.7, the S&P 500 gained 6.68 points, or 0.15 per cent, to 4,478.05 and the Nasdaq Composite added 40.96 points, or 0.27 per cent, to 14,938.30.

London’s FTSE 100 falls on rate hike worries

London’s FTSE 100 slipped on Monday as investors ramped up bets of a quicker interest rate hike by the Bank of England, while gaming company Playtech soared after a 2.1-billion-pound takeover offer by Australia’s Aristocrat Leisure. The blue-chip FTSE 100 index ended 0.4 per cent lower, marking its worst session in nearly two weeks, with healthcare and travel-related shares leading declines. The pan-European STOXX 600 index lost 0.52 per cent.

Tech View: Consolidation looks imminent

Analysts suggested that Nifty50 could consolidate near the 18,500 points for some time before shooting higher in the short term. Shrikant Chouhan of Kotak Securities said the Doji Star candle suggests a temporary overbought situation but the short-term trend is still positive.

F&O: Sharp rise in VIX a worry

A spike in India VIX suggested a volatile move could but the main reason for the spike was Call unwinding pressure in the market. Now VIX needs to cool down below the 15-14 zone to continue the smooth market ride. Options data suggested an immediate trading range between 18,200 and 18,700 levels.

Stocks showing bullish bias

Momentum indicator Moving Average Convergence Divergence (MACD) showed bullish trade setup on the counters of RVNL, Bharat Electronics, HUDCO, Karnataka Bank, Ambuja Cements and Rain Industries.

The MACD is known for signalling 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 GSFC, United Spirits, DCW, SRF, National Fertilizers, Polycab India, NOCIL, Vascon Engineers, KRBL, Gabriel India, Orient Abrasives, and Triveni Turbines. A bearish crossover on the MACD on these counters indicated that they have just begun their downward journey.

Most active stocks in value terms

Tata Power (Rs 6901 crore), IRCTC (Rs 4579 crore), Tata Motors (Rs 3728 crore), HCL Tech (Rs 2939 crore), Avenue Supermarts (Rs 2461 crore), HDFC Bank (Rs 2438 crore), Infosys (Rs 2379 crore), NALCO (Rs 2193 crore), PNB (Rs 1845 crore) and Vedanta (Rs 1785 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

PNB (Shares traded: 40.5 crore), YES Bank (Shares traded: 32.7 crore), Tata Power (Shares traded: 27.3 crore), NALCO (Shares traded: 18.3 crore), Vodafone Idea (Shares traded: 13.7 crore), SAIL (Shares traded: 11.5 crore), Bank of Baroda (Shares traded: 10.9 crore), NHPC (Shares traded: 9.9 crore), Tata Motors (Shares traded: 7.2 crore) and Suzlon Energy (Shares traded: 6.6 crore) were among the most traded stocks in the session.

Stocks showing buying interest: Tata Power, NHPC, SJVN, NALCO and Vedanta witnessed strong buying interest from market participants as they scaled their fresh 52-week highs, signaling bullish sentiment.

Stocks seeing selling pressure

Servotech Power, Destiny Logistics and Pasupati Acrylon 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 bulls. As many as 284 stocks on the BSE500 index settled the day in the green, while 216 settled the day in the red.

Podcast: Should you be cautious now?
The BSE barometer Sensex added 460 points to close just at 61,765. However, it is less than 40-odd points shy of hitting the 62,000 mark during the day. Its broader peer, Nifty50 gained about 140 points to close above 18,475. It topped 18,500-mark during the day. The broader markets settled in green but the BSE midcap index gained a per cent. Fear gauge India VIX spiked wildly 9 per cent, breaching 17-level once again. Should one be cautious about the frothy valuations in the equities?

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