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

MUMBAI: Nifty50 on Tuesday formed a bearish candle on the daily chart with no upper wick as the benchmark index closed lower for the first time in eight sessions.

Here’s how analysts read the market pulse:

Sameet Chavan of Angel Broking said a follow-through selling in the next couple of sessions may confirm the short-term correction in the market. “A sustainable move below this would be considered as the first sign of weakness. On the flipside, 18,500 -18,600 has now become immediate hurdles,” he said.

Shrikant Chouhan of Kotak Securities said that for day traders, 18,550-18,600 levels would be the immediate hurdle and below the same, the correction wave could continue up to 18,350-18,300 points.

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

Wall Street rises on upbeat earnings

U.S. stock indexes rose on Tuesday as upbeat results from Johnson & Johnson and Travelers fired up risk appetite after big banks kicked off the third-quarter reporting period on a positive note last week. At 9:43 a.m. ET the Dow Jones Industrial Average was up 107.86 points, or 0.31 per cent, at 35,366.47, the S&P 500 was up 17.41 points, or 0.39 per cent, at 4,503.87 and the Nasdaq Composite was up 65.66 points, or 0.44 per cent, at 15,087.47.

London’s FTSE 100 ends higher

London’s FTSE 100 ended higher on Tuesday, aided by gains in insurers and retail stocks, while the price comparison website was the top gainer in the mid-cap index after it agreed to buy cashback business Quidco. After falling as much as 0.2 per cent, the blue-chip FTSE 100 index rebounded to end 0.2 per cent higher with insurers and retailers leading gains. Broader STOXX Europe 600 climbed 0.38 per cent to 468.82

Tech View: Nifty looks fatigued

The index has negated the higher lows it was forming for the last couple of sessions. Technical indicators such as the 14-day RSI are suggesting the index is still in the overbought zone. Consolidation is likely, said analysts, who believe the 18,300 level would be crucial support for the index.

F&O: Tug of war between bulls and bears

There was minor call writing at 18,600 strike price and then 18,400 strike price, while there was put writing at 18,400 strike price and then 18,300 strike price. Open interest concentration at 18,500 level is giving an early hint of a tug of war between the bulls and the bears.

Stocks showing bullish bias

Momentum indicator Moving Average Convergence Divergence (MACD) showed bullish trade setup on the counters of Hemisphere Properties, L&T Infotech, Nippon Life AMC, Zensar Tech, L&T Technologies and APL Apollo Tubes.

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 ONGC, DLF, Delta Corp, RBL Bank, Bharat Electronics, Exide Industries, Shriram EPC, Gujarat Mineral Development, Bhansali Engineering, Oberoi Realty, Dhanlaxmi Bank, and Sterling and Wilson. 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 9083 crore), Tata Power (Rs 6010 crore), IEX (Rs 5910 crore), Tata Motors (Rs 2860 crore), L&T Infotech (Rs 2563 crore), Infosys (Rs 1879 crore), ITC (Rs 1484 crore), HUL (Rs 1431 crore), Tech Mahindra (Rs 1326 crore) and HCL Tech (Rs 1261 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: 34.8 crore), Tata Power (Shares traded: 24.6 crore), PNB (Shares traded: 15.1 crore), YES Bank (Shares traded: 14.7 crore), Bank of Baroda (Shares traded: 8.0 crore), Adani Power (Shares traded: 7.2 crore), TV18 Broadcast (Shares traded: 7.0 crore), IEX (Shares traded: 6.5 crore), Trident (Shares traded: 6.1 crore) and BHEL (Shares traded: 6.0 crore) were among the most traded stocks in the session.

Stocks showing buying interest: L&T Infotech, TTK Prestige, Mahindra CIE, IEX and L&T Technology witnessed strong buying interest from market participants as they scaled their fresh 52-week highs, signaling bullish sentiment.

Stocks seeing selling pressure

HEC Infraprojects, Nandini Creations, Aero Lam and Servotech Power 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 85 stocks on the BSE500 index settled the day in the green, while 415 settled the day in the red.

Podcast: Would the market cool off going ahead?
Bulls took a breather on Dalal Street as the domestic equity markets snapped the seven-day winning streak and ended in the red. Benchmark indices erased early gains as profit booking in metal, realty, auto, FMCG and banking shares dented the sentiments. Buying in IT stocks could not support the markets. Markets oscillated between red and green, thanks to the volatility. With the way the market behaved on Tuesday, should one expect a cooling off in the coming days?

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