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

NEW DELHI: Nifty50 on Monday found support at its 20-day moving average as the index eventually formed a reversal ‘Hammer’ candle on the daily chart. While the index continued with its lower high-low formation for the fourth straight session, analysts believe a follow-up buying may increase the chances of a recovery going ahead.

Here’s how analysts read the market pulse:

Rohit Singre of LKP Securities said the Hammer candle is a bullish reversal candle pattern by nature. Good support for Nifty50 is in the 18,030-17,970 range, he said, adding that if the index manages to hold above the range, one may see the extension in the current pullback.

Gaurav Ratnaparkhi, Head of Technical Research, Sharekhan at said the 20-DMA induced the bulls into the action, rescuing Nifty50 for the day. The index has managed to hold on to the crucial support of 18,000 on a closing basis, he said, adding that the hourly lower Bollinger Band has become flat, which is expected to provide support on the downside. “Also, the hourly momentum indicator has developed a positive divergence, which is suggesting that a bounce is around the corner,” he said.

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

Wall St climbs ahead of big tech earnings

US stock indexes edged higher in choppy trade on Monday, led by gains in Tesla and PayPal shares, while investors geared up for earnings reports from heavyweight technology companies this week that could provide direction to the markets. At 10:09 a.m. ET, the Dow Jones Industrial Average was up 29.88 points, or 0.08 per cent, at 35,706.90, the S&P 500 was up 5.33 points, or 0.12 per cent, at 4,550.23, and the Nasdaq Composite was up 45.24 points, or 0.30 per cent, at 15,135.44.

European stocks end flat

European stocks closed flat on Monday, as gains in banks and commodity-linked sectors were offset by losses in industrial stocks on rising bond yields, and as the outlook for the telecom sector deteriorated. The pan-European STOXX 600 closed largely unchanged at 472.21 points, with concerns over rising inflation and slowing economic growth also weighing on sentiment.

Tech View: Recovery likely ahead

Analysts believe a follow-up buying may increase the chances of a recovery going ahead. They see resistance at 18,300-18,360 while they see strong support placed at 18,000 level. A resumption of the uptrend, meanwhile, will be confirmed only on a close above 18,604 levels, they said.

F&O: Range bound movement likely

On the options front, the maximum put open interest is at 18,000, followed by the 17,500 strike. Maximum Call open interest is at 19,000, followed by 18,500 strike. Call writing is seen at 18,900 and 18,600 strikes while minor Put writing is seen at 17,600 and 17,800 strikes. Options data suggest an immediate trading range between 17,900 and 18400, Chandan Taparia of Angel One said.

Stocks showing bullish bias

Momentum indicator Moving Average Convergence Divergence (MACD) showed a bullish trade setup on the counters of MRPL, Orient Electric, Aarti Drugs, Jubilant Industries and Capital Trust.

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 Jaiprakash Power, BHEL, Nalco, IEX, IDBI Bank, Ashok Leyland, Indiabulls Housing, Central Bank and Tata Motors. A bearish crossover on the MACD on these counters indicated that they have just begun their downward journey.

Most active stocks in value terms

ICICI Bank (Rs 7,996 crore), IRCTC (Rs 3,208.67 crore), Axis Bank (Rs 2,469 crore), Reliance Industries (Rs 2072.49 crore), Tata Power (Rs 1,974.63 crore), SBI (Rs 1,812 crore) and Tata Motors (Rs 1,592 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

Vodafone Idea (Shares traded: 22.55 crore), YES Bank (Shares traded: 15.63 crore), PNB (Shares traded: 15.34 crore), Bank of Baroda (Shares traded: 14.27 crore), ICICI Bank (Shares traded: 9.61 crore), Tata Power (Shares traded: 9.2 crore), JP Power (Shares traded: 8.57 crore), Federal Bank (Shares traded: 7.89 crore), IRFC (Shares traded: 5.33 crore) and BHEL (Shares traded: 4.61 crore) were among the most traded stocks in the session.

Stocks seeing selling pressure

AstraZeneca, Biocon, SREI Infra Indostar Capital Finance, Spandana Sphoorty Financial and Strides Pharma Science 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 2,363 stocks on the BSE settled the day in the red while 1006 settled the day in the red.

Podcast: Can banks help the indices sustain higher levels?
BSE barometer, the Sensex, remained in the range of 955 points during the session. It gained about 150 points to close at 60,967, recovering more than 500 points from the day’s low. Its broader peer, Nifty50, settled at 18,125, merely 11 points higher. The NSE barometer breached 18,000 level during the day but made a comeback of more than 150 points and ended the day in the green. ICICI Bank was the star performer on the BSE Sensex today as the private lender soared 11 per cent, whereas Axis Bank rallied 3 per cent. Can banking stocks help the indices sustain higher levels?

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