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

MUMBAI: Nifty50 on Tuesday formed a long bullish candle on the daily chart as the benchmark index closed higher for the second successive session. Analysts said that the index is in recovery mode and could hit lifetime highs in the coming days.

Here’s how analysts read the market pulse:

Independent Analyst Manish Shah said that the Nifty50 formed a bullish candle after the previous session’s Morning Star formation, which confirms the bullishness in the market. “The underlying trend remains sharply up as the directional movement index is showing signs of bullishness. The ADX is showing strength as it continues to show a reading above 40,” he said.

Mazhar Mohammad of said the decent bullish candle is suggesting that a fresh leg of upswing may be unfolding from the recent lows of 17,450 level. “If the index sustains above 17,640 level on Wednesday, bulls can attempt to test recent lifetime highs present at 17,947,” he said.

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

Wall Street gains as big techs rebound

Wall Street’s main indexes rose on Tuesday as growth stocks bounced from a sharp selloff, while economy-sensitive cyclical sectors of the market remained in favor ahead of closely watched monthly payrolls data later in the week. At 11:15 a.m. ET, the Dow Jones Industrial Average was up 472.37 points, or 1.39 per cent, at 34,475.29, the S&P 500 was up 63.78 points, or 1.48 per cent, at 4,364.24 and the Nasdaq Composite was up 222.11 points, or 1.56 per cent, at 14,477.60.

Europe shares close on a high

London’s FTSE 100 rallied from recent losses on Tuesday as signs of recovery saw investors piling into economically sensitive sectors, with energy stocks rising as oil prices hit three-year highs. The blue-chip FTSE 100 index gained 0.9 per cent after three straight sessions of losses, aided by over 2 per cent jump in both banks and life insurance stocks. The broader STOXX Europe 600 climbed 1.19 per cent to 456.14.

Tech View: Index may eye record levels

Analysts said that the Nifty50 index may revisit its all-time high levels but will face resistance at 17,840 and 17,950 levels. The support for the benchmark index is now seen at 17,500-17,550 points for the remainder of this week.

F&O: Buying interest to continue

The overall decline in volatility in the last few sessions may offer comfort to the bulls and any decline could be bought into. Options data suggested a broader trading range between 17,200 and 18,200 levels, while the immediate trading range stood between 17,500 and 18,000 levels.

Stocks showing bullish bias

Momentum indicator Moving Average Convergence Divergence (MACD) showed bullish trade setup on the counters of IDFC First Bank, RVNL, Bharat Petroleum, JK Paper, IRCTC and IndusInd Bank.

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 Zee Entertainment, Cipla, PetronetLNG, Aditya Birla Capital, Reliance Capital, PC Jeweller, Apollo Tyres, Century Textiles, Royal Orchid, Godrej Industries, Cambridge Tech, and Westlife Development. A bearish crossover on the MACD on these counters indicated that they have just begun their downward journey.

Most active stocks in value terms

IRCTC (Rs 3036 crore), Tata Power (Rs 2884 crore), ONGC (Rs 2090 crore), Bharti Airtel (Rs 1773 crore), RIL (Rs 1613 crore), Tata Motors (Rs 1104 crore), Deepak Nitrite (Rs 1028 crore), Piramal Enterprises (Rs 951 crore), Coal India (Rs 828 crore) and HDFC Bank (Rs 815 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: 65 crore), Tata Power (Shares traded: 16 crore), ONGC (Shares traded: 13 crore), YES Bank (Shares traded: 10 crore), BHEL (Shares traded: 6 crore), NALCO (Shares traded: 5 crore), SAIL (Shares traded: 4 crore), Coal India (Shares traded: 4 crore), Tata Motors (Shares traded: 3 crore) and Suzlon Energy (Shares traded: 3 crore) were among the most traded stocks in the session.

Stocks showing buying interest: GNFC, ONGC, Network18, Tata Power and Nazara Technologies witnessed strong buying interest from market participants as they scaled their fresh 52-week highs, signaling bullish sentiment.

Stocks seeing selling pressure

Silgo Retail, Quadpro and Inventure Growth 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 296 stocks on the BSE500 index settled the day in the green, while 204 settled the day in the red.

Podcast: Is it the right time to book profits?
The IT and Oil & Gas sector saw strong buying on Tuesday, whereas metal, pharma and realty stocks were under pressure. BSE Sensex gained over 445 points to settle merely 5-odd points shy of 59,750 mark. Nifty50 gained more than 130 points to end the day at 17,833, just 11 points below the day’s high. Broader markets underperformed but BSE midcap and smallcap indices were able to settle in green. Fear gauge India VIX eased over 2 per cent. Markets are again inching towards lifetime highs. Should one book profits at these levels?

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