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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 as the benchmark index failed to build on the strong momentum seen on Monday. Analysts said that the index saw selling pressure again at the 18,000 level.

Here’s how analysts read the market pulse:

Gaurav Ratnaparkhi, Head of Technical Research of Sharekhan said that Nifty50 had broken out from a base triangle on the hourly chart in the previous session and saw some recovery. “The 18,000 mark acted as a key barrier. Though that level was crossed on an intraday basis the index couldn’t sustain,” he said.

Mazhar Mohammad of said that the Nifty50 appears to be struggling to get past its 5-day exponential moving average for the last two trading sessions.

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

Wall Street scales record peaks

Wall Street’s main indexes climbed to record highs on Tuesday, getting a boost from a string of encouraging earnings reports, while investors anticipated the Federal Reserve’s next meeting where policymakers are expected to announce the withdrawal of pandemic-era stimulus. At 12:00 p.m. ET, the Dow Jones Industrial Average was up 95.92 points, or 0.27 per cent, at 36,009.76, the S&P 500 was up 13.38 points, or 0.29 per cent, at 4,627.05, and the Nasdaq Composite was up 26.37 points, or 0.17 per cent, at 15,622.28.

World shares climb higher

The STOXX 600 in Europe edged higher on strong corporate results and France’s CAC 40 index hit its highest since 2000. MSCI’s all-country world index, which tracks equity performance in 50 nations, rose 0.1 per cent to 749.23 after earlier hitting an all-time high.

Tech View: 18,000 remains key hurdle

Analysts said that the inability of Nifty50 to sustain above the 18,000-mark and the profit booking that followed suggested that any sustained positive momentum will hinge on the benchmark index crossing that level on a closing basis.

F&O: Hope remains high

In the derivatives segment, traders sold both the out-of-money call and put options of the Nifty50 index suggesting that they expect the index to move sideways in the coming sessions.

Stocks showing bullish bias

Momentum indicator Moving Average Convergence Divergence (MACD) showed bullish trade setup on the counters of Indiabulls Real Estate, Aditya Birla Fashion, Allcargo, Bharti Airtel, and Dabur India.

The MACD is known for signaling 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 Tech Mahindra, R Systems, Rajesh Exports, HSIL, Bharat Dynamics, TT, IFB Industries, and Williamson Magor. 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 Motors (Rs 2550 crore), Tata Power (Rs 2112 crore), Sun Pharma (Rs 1427 crore), SBI (Rs 1391 crore), HDFC (Rs 1260 crore), RIL (Rs 1224 crore), TCS (Rs 1078 crore), HDFC Bank (Rs 1066 crore), Maruti Suzuki (Rs 1020 crore) and RBL Bank (Rs 1000 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

Tata Power (Shares traded: 9.2 crore), Vodafone Idea (Shares traded: 8.2 crore), Bank of Baroda (Shares traded: 6.2 crore), YES Bank (Shares traded: 6.0 crore), PNB (Shares traded: 5.3 crore), Tata Motors (Shares traded: 5.2 crore), RBL Bank (Shares traded: 4.96 crore), SAIL (Shares traded: 4.9 crore), IDFC First Bank (Shares traded: 4.6 crore) and BHEL (Shares traded: 4.3 crore) were among the most traded stocks in the session.

Stocks showing buying interest: Allcargo, Tube Investments, Devyani International, Shriram Transport Finance, Tatva Chintan and Orient Electric witnessed strong buying interest from market participants as they scaled their fresh 52-week highs, signaling bullish sentiment.

Stocks seeing selling pressure

Bayer Cropscience, Servotech Power, Pasupati Acrylon, and Mahindra EPC witnessed strong selling pressure and hit their 52-week lows, signaling bearish sentiment on these counters.

Sentiment meter favours bulls

Overall, the market breadth remained in favour of the bulls. As many as 311 stocks on the BSE500 index settled the day in the green, while 189 settled the day in the red.

Podcast: What should investors expect from FOMC meet?
Domestic equity markets were back in red after a day’s rebound. Benchmark indices succumbed to the sellings pressure in metal, oil and commodity stocks. However, realty, PSU bank and consumer durables stocks provided some relief. All eyes are on the outcome of the Federal Reserve policy meeting, where the central bank may signal the start of tapering. What should investors expect from the Fed’s FOMC meeting?

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