Manish Hathiramani, proprietary index trader and technical analyst at Deen Dayal Investments said, “We have broken the crucial support of 14,350 and should ideally be headed further south to levels closer to 14,150 and then 14,000. Markets have become volatile and strict stops must be placed on all trades. 14,500 has become a resistance zone and any rally up can be utilized to short the Nifty for lower targets.”
“The market has got choppy ahead of the upcoming union budget and due to weakness in an expensive global market. A good part of the economic gains is well factored in by the upside of the last 11 weeks. A short-term correction was being anticipated for some time. It will be welcome for the market on a long-term basis,” 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 Tuesday’s action:
Wall Street closed for Martin Luther King day
Wall Street was closed on Monday on account of Martin Luther King day. The Dow Jones Industrial Average closed 177.26 points, or 0.57% lower, at 30,814.26, the S&P 500 lost 27.29 points, or 0.72%, to 3,768.25 and the Nasdaq Composite dropped 114.14 points, or 0.87%, to 12,998.50.
European shares slip on economic recovery worries
European stocks inched lower on Monday as French retailer Carrefour tumbled after ending 16.2 billion euro ($19.57 billion) merger talks with Alimentation Couche-Tard, with worries about a slow economic recovery keeping investors on edge. The pan-European STOXX 600 index was up 0.16% after snapping a four-week winning run on Friday, with losses in oil and utilities offset by gains in technology stocks.
Tech View: Nifty50 forms big bearish candle
Nifty50 on Monday extended losses to the second consecutive day and formed another big bearish candle on the daily chart. In the process, the index violated its multiple day support level of 14,350, indicating a negative bias. “The index continues to move in a lower top and lower bottom formation on the hourly chart, indicating a negative bias. The chart pattern suggests that if Nifty crosses and sustains above 14,300, it would witness buying which would lead the index towards 14,400-14,500. However, if the index breaks below 14,200, it would witness selling which would take the index towards 14,100-14,000,” said Rajesh Palviya of Axis Securities.
Check out the candlestick formations in the latest trading sessions
F&O: VIX needs to cool down below 20
Volatility index India VIX went up by 1.6 per cent to 24.39. Volatility has spiked above 24 which is causing a pause in the positive momentum and needs to cool down below 20. Call writing was seen at 14,500 and 14400 strike, while Put writing was seen at 14,100 and unwinding at 13,800 strike. Options data suggested a wider trading range in between 13,800 and 14,600 zones, while an immediate trading range was between 14,100 and 14500 levels.
Stocks showing bullish bias
Momentum indicator Moving Average Convergence Divergence (MACD) on Monday showed bullish trade setup on the counters of Phillips Carbon, Aptech, Kellton Tech Solution, Jain Irrigation, Xchanging Solutions, Dhani Services, Chembond Chemicals, Tata Communications and Sundaram BrakeLining.
Stocks signalling weakness ahead
The MACD showed bearish signs on the counters of Bharat Heavy Electricals, L&T Finance Holdings, ONGC, Canara Bank, Tata Power, Federal Bank, Indiabulls Housing Finance, Tata Steel BSL, HCL Technologies, RBL Bank, PetronetLNG, Jindal Steel & Power, REC, Adani Ports & SEZ, TV18 Broadcast, Tata Chemicals, NHPC, Adani Enterprises, Tech Mahindra, Exide Industries, Indus Towers, Sun TV Network, Shriram Transport Finance, Fortis Healthcare, Dabur India, MMTC, HDFC Life Insurance, Rallis India, Glenmark Pharma, Network 18 Media, Jamna Auto Industries, SREI Infrastructure and Just Dial.
Monday’s most active stocks
Tata Motors (Rs 4324.97 crore), HDFC Bank (Rs 3188.19 crore), RIL (Rs 3187.45 crore), UPL (Rs 2034.15 crore), Bajaj Finance (Rs 1757.85 crore), Tata Steel (Rs 1691.06 crore), SBI (Rs 1644.79 crore), ITC (Rs 1480.09 crore), TCS (Rs 1344.00 crore) and HDFC (Rs 1329.92 crore) were among the most active stocks on Dalal Street on Monday in value terms.
Monday’s most active stocks in volume terms
Vodafone Idea (Shares traded: 49.46 crore), YES Bank (Shares traded: 21.09 crore), Tata Motors (Shares traded: 17.34 crore), SAIL (Shares traded: 11.47 crore), PNB (Shares traded: 11.30 crore), Vikas Multicorp (Shares traded: 6.99 crore), ITC (Shares traded: 6.76 crore), Bank of Baroda (Shares traded: 5.85 crore), 3i Infotech (Shares traded: 5.60 crore) and SBI (Shares traded: 5.50 crore) were among the most traded stocks in the session.
Stocks showing buying interest
Suzlon Energy, Capri Global, Max Healthcare, Indian Energy Exchange and HDFC Bank witnessed strong buying interest from market participants as they scaled their fresh 52-week highs on Monday signalling bullish sentiment.
Stocks seeing selling pressure
Acrysil Ltd, Antony Waste Handling Cell, Fairchem Organics, Godha Cabcon & Insulation, Jump Networks, Kanpur Plastipack and Vishal Fabrics witnessed strong selling pressure in Monday’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 bears. As many as 66 stocks on the BSE 500 index settled the day in green, while 433 settled the day in red.
Podcast: Is it time to buy this dip in Nifty? >>>
Bears were dominating for the second day today as cyclical stocks and banks took a heavy beating, while weak global cues also played a spoilsport. In the broader market, the cuts were deeper as selling pervaded throughout the midcap and smallcap space with investors booking some of the profits seen in recent weeks. We caught up with Daljit Singh Kohli of Stockaxis.com to know his views on the market.