Here’s how analysts read the market pulse:
Mazhar Mohammad of Chartviewindia.in said the selling at highs hints at the lack of conviction on the part of bulls to push the index higher. “Nifty50 needs to sustain above 17,367-level, else it may come under selling pressure with initial targets of 17,270-250 levels,” he said.
Shrikant Chouhan of Kotak Securities said the index has formed a triple-top kind of formation on the intraday chart. “For the bulls, 17,450 would be the range breakout level. Above the same, the breakout formation could continue up to 17,500-17,525 level,” he said.
That said, here’s a look at what some of the key indicators are suggesting for Wednesday’s action:
Wall Street slips on tax uncertainty
Wall Street indexes fell on Tuesday on uncertainty over a possible increase in corporate taxes, even though slowing growth in monthly consumer prices eased some fears of the Federal Reserve reducing stimulus early. At 10:12 a.m. ET, the Dow Jones Industrial Average fell 110.28 points, or 0.32 per cent , to 34,759.35, the S&P 500 lost 9.54 points, or 0.21 per cent, to 4,459.19 and the Nasdaq Composite lost 4.14 points, or 0.03 per cent, to 15,101.35.
European shares end flat
European stocks ended flat on Tuesday, with miners, banks and luxury stocks leading declines as optimism over cooling U.S. inflation growth in August proved to be short-lived. The region-wide STOXX 600 index inched 0.01 per cent lower, with the basic resources sector index dropping 1.9 per cent and banks sliding 1.1 per cent.
Tech View: Nifty bulls lack conviction at highs
Nifty50 on Tuesday formed a small bearish candle on the daily chart and marked the sixth day of narrow trading moves for the index. The NSE barometer ended the day within its recent consolidation range of 17,250-450, despite hitting a fresh all-time high. Analysts said the bulls lack conviction at highs.
F&O: VIX needs to hold below 13 level
India VIX fell 3.44 per cent from 14.02 to 13.53 level. India VIX needs to hold below the 13-level to continue the bullish momentum. Options data suggested a broader trading range between 17,000 and 17,800 levels and an immediate trading range between 17,200 and 17,500.
Stocks showing bullish bias
Momentum indicator Moving Average Convergence Divergence (MACD) showed bullish trade setup on the counters of HCL Technologies, Reliance Industries, Granules India, Tamilnadu Petroprod, Dwarikesh Sugar, Tata Consultancy, Jindal Saw, Cosmo Films, Stampede Capital, Dhampur Sugar, Sanginita Chemicals, Nahar Poly Films, Vimta Labs, KCP, Tata Metaliks, Jocil, Avadh Sugar & Energy, CMI, NCL Industries, Birla Corporation, Dhanuka Agritech, Sundaram Finance, Matrimony.com, Bharat Wire Ropes, Excel Industries, Expleo Solutions, Zuari Agro Chemicals, Voltamp Transformers, TVS Srichakra, Bigbloc Construction, Sandesh and Tasty Bite.
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 Indiabulls Real Estate, Vedanta, Adani Enterprises, Allcargo Logistics, PTC India, Bajaj Finance, Tata Consumer Products, Cummins India, Jubilant Foodworks, Computer Age Management, Cholamandalam Finance, Kennametal India, Nestle India, Precision Wires, Madhya Bharat Agro, Khandwala Securities, Dhunseri Investments and Shradha Infraproject. A bearish crossover on the MACD on these counters indicated that they have just begun their downward journey.
Most active stocks in value terms
Zee Entertainment (Rs 5209.02 crore), IRCTC (Rs 4312.42 crore), Zomato (Rs 1632.69 crore), Vijaya Diagnostic Centre (Rs 1303.66 crore), Adani Enterprises (Rs 1082.16 crore), Ami Organics (Rs 1026.06 crore), RIL (Rs 977.45 crore), YES Bank (Rs 950.23 crore), Info Edge (Rs 866.81 crore) and Infosys (Rs 834.93 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
YES Bank (Shares traded: 77.76 crore), Vodafone Idea (Shares traded: 77.68 crore), Zee Entertainment (Shares traded: 21.86 crore), Zomato (Shares traded: 11.24 crore), Reliance Power (Shares traded: 9.02 crore), BHEL (Shares traded: 5.97 crore), Suzlon Energy (Shares traded: 4.19 crore), Reliance Comm (Shares traded: 4.19 crore), GAIL (Shares traded: 3.63 crore) and Hathway Cable (Shares traded: 3.39 crore) were among the most traded stocks in the session.
Stocks showing buying interest
Zee Entertainment, Hatsun Agro, Solar Industries, Galaxy Surfactants and IRCTC witnessed strong buying interest from market participants as they scaled their fresh 52-week highs, signalling bullish sentiment.
Stocks seeing selling pressure
ABM International, Ami Organics and Varroc Engineering witnessed strong selling pressure and hit their 52-week lows, signalling bearish sentiment on these counters.
Sentiment meter favours bulls
Overall, the market breadth remained in favour of the bulls. As many as 297 stocks on the BSE500 index settled the day in the green, while 197 settled the day in the red.
Podcast: What can spoil D-Street’s party?
Domestic equity markets were back in green on Tuesday, though the actions remained lacklustre and benchmark indices wiped off most of their early gains. Hopes of an extended monetary stance boosted the morale of traders. BSE Sensex added only 70-odd points to close just shy of 58,250, about 235 points below day’s high. Nifty50 gained 25 points to end the day at 17,380. India’s macros are improving and the domestic market is rejoicing. Can a third Covid wave play spoilsport?