Ahead of Market: 10 things that will decide D-Street action on Thursday

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Benchmark equity index Nifty 50 surged to record closing high on Wednesday, boosted by state-owned companies, while investors awaited key inflation readings and the Federal Reserve’s rate decision.

The NSE Nifty 50 settled 0.25% higher at 23,323, while the S&P BSE Sensex added 0.20% to 76,606. The Nifty 50 rose as much as 0.65% to a record high in early trade before surrendering some gains.

Here’s how analysts the market pulse:

“The Nifty closed flat after a strong initial hour of trading, encountering resistance around 23,400. However, the short-term trend remains positive as the index stayed above 23,300. In the near term, the index might continue consolidating within the 23,300-23,500 range. A decisive breakout above 23,500 could trigger a rally towards 23,800,” said Rupak De of LKP Securities.

Jatin Gedia of Sharekhan, said, “On daily charts, we can observe that Nifty has been broadly trading in the range of 23,450 – 23,200 for the last three trading sessions. The hourly momentum indicator has a negative crossover and thus the rallies are fizzling out at higher levels. The ideal strategy would be to buy on a dip around 23150 – 23100 where support in the form of the 40 hour moving average is placed. On the upside, 23400 – 23450 remains the target zone.”That said, here’s a look at what some key indicators are suggesting for Thursday’s action:

US market

The S&P 500 and the Nasdaq jumped to record highs on Wednesday after softer inflation data lifted hopes for a rate cut by the Federal Reserve, while Apple overtook Microsoft as the world’s most valuable company.

Apple’s shares climbed 3.7% to hit a record high and dethrone Microsoft for the first time in five months, with the iPhone maker’s market valuation rising to $3.24 trillion versus Microsoft’s $3.23 trillion.

At 9:55 a.m. ET, the Dow Jones Industrial Average was up 269.64 points, or 0.70%, at 39,017.06, the S&P 500 was up 57.32 points, or 1.07%, at 5,432.64, and the Nasdaq Composite was up 283.54 points, or 1.63%, at 17,627.09.

European shares

European shares gained on Wednesday, supported by a drop in euro zone bond yields ahead of the release of crucial U.S. inflation data and the outcome of the Federal Reserve’s policy meeting later in the day.

The pan-European STOXX 600 was up 0.5% as of 0837 GMT, after two sessions of declines amid French political uncertainty.

Most sectors traded higher, with a 1.3% gain in European lenders being the biggest boost, while automobile stocks underperformed with a 1% drop.

Tech View: Small negative candle

Nifty ended Wednesday’s session with a gain of 58 points but saw the formation of a small negative candle with upper shadow on the daily chart to signal range-bound action at the crucial hurdle of around 23,400-23,500 levels.

The overhead resistance of key Fibonacci extension, opening upside gap of 4th June, upward sloping resistance line are intact around 23400-23500 levels. As long as this hurdle is not taken out decisively on the upside, one can’t rule out the possibility of a downward correction. Immediate support is at 23,200 levels and a move below this area is likely to trigger a quick selloff in the market, said Nagaraj Shetti of HDFC Securities.

Open Interest (OI) data showed that on the call side, the highest OI was observed at 23,500 and 24,000 strike prices. On the put side, the highest OI was at the 23,200 strike price.

Stocks showing bullish bias

Momentum indicator Moving Average Convergence Divergence (MACD) showed bullish trade on the counters of Bosch, Kirloskar Brothers, CAMS, Kirloskar Pneumatic Company, Poly Medicure, and Godrej Properties among others.

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 signaling weakness ahead

The MACD showed bearish signs on the counters of TVS Holdings, Balkrishna Industries, IndiGo, Metropolis Healthcare, Sky Gold, Honasa Consumer, and Axis Bank among others. Bearish crossover on the MACD on these counters indicated that they have just begun their downward journey.

Most active stocks in value terms

HDFC Bank (Rs 3,097 crore), ICICI Bank (Rs 1,806 crore), Tata Motors (Rs 1,746 crore), RIL (Rs 1,478 crore), Infosys (Rs 1,428 crore), SBI (Rs 1,266 crore), and Kotak Mahindra Bank (Rs 1,011 crore) were among the most active stocks on NSE in value terms. Higher activity on a counter in value terms can help identify the counters with highest trading turnovers in the day.

Most active stocks in volume terms

Tata Steel (Shares traded: 3.3 crore), ONGC (Shares traded: 2 crore), Power Grid (Shares traded: 2 crore), HDFC Bank (Shares traded: 1.9 crore), Tata Motors (Shares traded: 1.7 crore), ICICI Bank (Shares traded: 1.6 crore), and Coal India (Shares traded: 1.5 crore) were among the most traded stocks in the session on NSE.

Stocks showing buying interest

Shares of UltraTech Cements, Bajaj Auto, Bharti Airtel, Cipla, Tata Steel, and Hero MotoCorp among others witnessed strong buying interest from market participants as they scaled their fresh 52-week highs, signaling bullish sentiment.

Stocks seeing selling pressure

No major stocks hit their 52-week lows on Wednesday.

Sentiment meter favours bulls

Overall, market breadth favoured bulls as 2,554 stocks ended in the green, while 1,336 names settled in the red.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

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