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

Estimated read time 18 min read
Domestic headline indices Nifty 50 and Sensex finished at record closing highs for the third session in a row on Tuesday, led by gains in banking and IT stocks, and boosted by strong domestic inflows as well as a climb in global equities.

The NSE Nifty 50 rose 0.39% to finish at 23,558, while the S&P BSE Sensex settled 0.40% higher at 77,301.

Here’s how analysts the market pulse:
“Following a strong start, Nifty remained within a range as the index formed another day of muted movement on the daily chart. For the last few days, Nifty has been moving sideways on an intraday basis, but eventually it has moved up above 23,500. The trend looks positive from here, with support placed at 23,300. A fall below 23,300 might induce selling pressure. On the higher end, the index might move towards 23,800,” said Rupak De of LKP Securities.

Rajesh Bhosale of Angel One, said, “With a bullish undertone, traders should focus on trades outside the index, as the real action lies there. Regarding levels, immediate support is around the bullish gap near 23,500, with key support at 23,350. In the uncharted territory, 23,650 to 23,700 appears to be immediate resistance. Traders are advised to monitor these levels and set up their trades accordingly.”

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

US market
The S&P 500 and the Dow rose on Tuesday following softer-than-expected U.S. retail sales numbers, with focus on commentary from a slew of Federal Reserve officials later in the day.

Data showed U.S. retail sales rose 0.1% in May, versus the 0.3% increase expected by economists polled by StuffsEarth, as lower gasoline prices weighed on receipts at service stations.

Markets slightly increased bets on two interest rate cuts from the Fed this year following the data, according to LSEG’s FedWatch.

At 9:46 a.m. ET, the Dow Jones Industrial Average was up 88.24 points, or 0.23%, at 38,866.34, the S&P 500 was up 9.62 points, or 0.18%, at 5,482.85, and the Nasdaq Composite was down 4.66 points, or 0.03%, at 17,852.36.

European shares
European shares closed higher on Tuesday, supported by a slip in government bond yields as investor concern over French political woes ebbed, with the focus shifting to data and policymakers’ comments to gauge global central banks’ monetary policy path.

The pan-European STOXX 600 closed nearly 0.7% up, with utilities leading sectoral gains, up 1.5%.

Euro zone government bond yields edged lower as concern over political risk in France subsided somewhat, while a weak read of U.S. consumer spending helped drive some investment flows into fixed income. The U.S. benchmark S&P 500 also advanced.

European shares posted their biggest weekly drop so far this year on Friday, as French President Emmanuel Macron called for a snap election following a trouncing of his ruling centrist party in the European Parliament elections.

Tech View: Doji candle
Nifty ended Tuesday’s trading session 92 points higher to form a Doji candle as the short-term trend of the index continues to be positive with range-bound action.

Having sustained above the hurdle of 23,515 levels (1.382% Fibonacci extension), one may expect Nifty to move towards the next resistance of 1.786% Fib extension at 23,950 levels in the near term while immediate support is placed at 23450, said Nagaraj Shetti of HDFC Securities.

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

Stocks showing bullish bias
Momentum indicator Moving Average Convergence Divergence (MACD) showed bullish trade on the counters of ABB India, Hindustan Aeronautics, Cochin Shipyards, BEML, Godfrey Phillips India, and Cummins India 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 Pfizer, Brigade Enterprises, HUL, Kirloskar Ferrous Industries, and Sumitomo Chemical India 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
HAL (Rs 5,442 crore), Mazagon Dock Shipbuilders (Rs 4,396 crore), Cochin Shipyard (Rs 2,697 crore), GRSE (Rs 2,620 crore), HDFC Bank (Rs 2,599 crore), BEL (Rs 2,059 crore), and ICICI Bank (Rs 2,044 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
Vodafone Idea (Shares traded: 80 crore), HFCL (Shares traded: 13.4 crore), GMR Infra (Shares traded: 11.5 crore), YES Bank (Shares traded: 9.3 crore), IDFC First Bank (Shares traded: 7.3 crore), BEL (Shares traded: 6.4 crore), and Samvardhana Motherson International (Shares traded: 5.5 crore) were among the most traded stocks in the session on NSE.

Stocks showing buying interest
Shares of GRSE, Cochin Shipyard, Ramkrishna Forging, Asahi India Glass, Mazagon Dock, Avanti Feeds, and Phoenix Mills 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 Tuesday.

Sentiment meter favours bulls
Overall, the market breadth favoured bulls as 2,167 stocks ended in the green, while 1,836 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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