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

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

NEW DELHI: NSE Nifty and its BSE counterpart Sensex both shed nearly 2 percent as the broader market saw a sell-off led by bank and financial stocks. The 50-pack Nifty formed a long bearish candle on the daily chart as the index continued its losing streak for the fourth consecutive session.

On the technical front, Shrikant Chouhan of Kotak Securities said, the Nifty50 has taken support at 13,950 level and it is possible that the index may give a healthy bounceback to 14,400-14,500 ahead of the Budget or the day of the Budget.

“Indian bourses mirrored mixed sentiment from global peers with a downward rally owing to consecutive days of FII selling. Barring the defensive FMCG segment, all sectors traded in the red zone, with banking and pharma stocks being the worst hit. The global markets were mixed today ahead of the US Fed meeting amid uncertainty over the US stimulus. We should expect higher volatility in the coming days given pre-Budget event risk,” said Vinod Nair, Head of Research at Geojit Financial Services.

That said here’s a look at what some of the key indicators are suggesting for Thursday’s action:
US stocks slide after Boeing results

The S&P 500 and the Dow fell sharply on Wednesday after planemaker Boeing reported a record annual loss, while declines on the Nasdaq were offset by upbeat results from Microsoft. The Dow Jones Industrial Average was down 429.73 points, or 1.39%, at 30,507.31, the S&P 500 was down 50.36 points, or 1.31%, at 3,799.26, and the Nasdaq Composite was down 141.04 points, or 1.04%, at 13,485.03.

European shares flat as tech, miners drag
European stocks were largely flat on Wednesday due to losses in technology and mining sectors and as investors stayed on the sidelines ahead of the U.S. Federal Reserve’s policy decision. The pan-European STOXX 600 index was down 1.17% following losses in Asian markets and Wall Street.

Tech View: Nifty tests the crucial 34-day EMA
Nifty50 on Wednesday slipped below the 14,000 mark, as it formed a ‘Bearish Belt Hold’ candle on the daily chart. Such a candle is formed when the day’s open becomes the day’s high point and the index sees selling through the rest of the session, reflecting bear domination. Analysts said the index tested its 34-day exponential moving average (EMA) during the session and hit an intraday low of 13,929. This level can now prove to be a crucial support for Nifty, followed by the 13,765 mark, they said. “The importance of 34-EMA stems from the fact that Nifty tested and consolidated around the said average for three sessions in October 2020, before resuming its rally from the low of 11,535 level,” said Mazhar Mohammad of Chartviewindia.in.

Check out the candlestick formations in the latest trading sessions


F&O: Volatile swings to continue
Nifty may continue to remain highly volatile ahead of Thursday’s monthly F&O expiry and next week’s Union Budget. Now, as long as Nifty remains below 14,200 level, every bounce can be sold into and weakness may be seen towards 13,800 level, while on the upside key hurdle exists at 14,200 and 14,350 levels. India VIX moved up 4.96 per cent from 23.24 to 24.39 levels. A surge in volatility due to selling pressure ahead of Budget 2021 could keep the market volatile with limited upside potential. Call writing was seen at 14,100 and then 14,200 levels, while there was Put writing at strike prices 13,900 and 13,500. Options data suggested an immediate trading range between 13,800 and 14,200 levels.

Stocks showing bullish bias
Momentum indicator Moving Average Convergence Divergence (MACD) on Wednesday showed bullish trade setup on the counters of ISMT, Redington (India), Prism Johnson, Orient Bell, Stampede Capital, Kingfa Science & Technologies, Inventure Growth & Securities, Asahi Songwon Colors and NBI Industrial Finance.

Stocks signalling weakness ahead
The MACD showed bearish signs on the counters of Bank of Baroda, Bharti Airtel, Tata Motors, Laurus Labs, Bharat Forge, Eicher Motors, Shree Digvijay, MSTC, PVR, Jyothy Labs, Godrej Consumer Products, Nippon Life AMC, Parag Milk Foods, Coromandel International, Tata Metaliks, Bajaj Electricals, Whirlpool of India, Radico Khaitan, Sudarshan Chemicals Industries, EID Parry, Supreme Petrochem, Varroc Engineering, Godrej Agrovet, TV Today Network, Hatsun Agro Product, Sanofi India, Vertoz Advertising, Suumaya Lifestyle, Nath Bio-Genes, Ahluwalia Contracts, Prabhat Dairy, Solar Industries India, M M Forgings, Lotus Eye Hospital, Talbros Automotive and Sundaram Brake Lining.

Wednesday’s most active stocks
RIL (Rs 3724.18 crore), Tata Motors (Rs 3413.03 crore), HDFC Bank (Rs 1692.54 crore), Axis Bank (Rs 1569.57 crore), ICICI Bank (Rs 1481.70 crore), Kotak Bank (Rs 1408.37 crore), Bajaj Finance (Rs 1360.44 crore), Wipro (Rs 1329.13 crore), IndusInd Bank (Rs 1313.64 crore) and HDFC (Rs 1212.13 crore) were among the most active stocks on Dalal Street on Wednesday in value terms.

Wednesday’s most active stocks in volume terms
Vodafone Idea (Shares traded: 42.59 crore), YES Bank (Shares traded: 22.48 crore), Tata Motors (Shares traded: 12.66 crore), Bank of Baroda (Shares traded: 7.25 crore), PNB (Shares traded: 6.98 crore), SAIL (Shares traded: 6.44 crore), Canara Bank (Shares traded: 4.96 crore), NALCO (Shares traded: 4.91 crore), ITC (Shares traded: 4.85 crore) and Tata Power (Shares traded: 4.71 crore) were among the most traded stocks in the session.

Stocks showing buying interest
Cyient, Route Mobile, P&G Health, IFB Industries and Bajaj Auto witnessed strong buying interest from market participants as they scaled their fresh 52-week highs on Wednesday signalling bullish sentiment.

Stocks seeing selling pressure
Fairchem Organics, Jiya Eco-Products, Jump Networks, Valiant Organics and Vishal Fabrics witnessed strong selling pressure in Wednesday’s session and hit their 52-week lows, signalling bearish sentiment on these counters.

Sentiment meter favours bears
Overall, market breadth remained in favour of bulls. As many as 146 stocks on the BSE 500 index settled the day in green, while 349 settled the day in red.

Podcast: Sectors that look attractive after today’s stock crash >>>
The bear mauling continued on Dalal Street for the fourth straight day as investors continued to lighten their positions ahead of the all-important Budget next week. Asset quality concerns hit banks while shares of RIL slipped further as Amazon tried to block Future Group assets’ deal. The 940-odd plunge on Wednesday took the four-day Sensex losses to nearly 2,400 points, eroding over Rs 8 lakh crore worth of investor fortunes. It also ensured that Nifty heads towards the F&O expiry day below the 14,000-mark. We caught up with Rusmik Oza of Kotak Securities to understand his views on the market.

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