Ahead of Market: 10 things that will decide stock action on Monday

Indian shares declined on Friday, as profit booking emerged after the Nifty 50 scaled a record high, trimming weekly gains for the blue-chip indices

The blue-chip Nifty 50 fell 0.8% and S&P BSE Sensex dropped 1% on the day, dragged by IT stocks. The Nifty 50 rose about 0.6% to a peak earlier in the session. The benchmarks added about 0.25% each this week, their second consecutive weekly rise.

Here’s how analysts read the market pulse:

“On the daily charts, Nifty has formed an engulfing bear candlestick pattern which has bearish implications. On the downside Nifty has managed to hold on to the 20-day moving average which once breached on the downside can lead to a further decline. Key support levels are placed at 22405 – 22285. On the upside immediate hurdle is placed at 22650,” said Jatin Gedia of Sharekhan.

Aditya Gaggar, Director of Progressive Shares, said, “Both the timeframes i,e, Weekly (DOJI) and Daily (Bearish Engulfing) indicate a trend reversal in the Index with a negative divergence in the RSI. We believe that the Index is likely to oscillate in the range of 22,160- 22,770.”That said, here’s a look at what some key indicators are suggesting for Monday’s action:

US market

Wall Street surged to a higher close on Friday as a softer-than-expected employment report bolstered the case for rate cuts from the Federal Reserve while also providing evidence of U.S. economic resilience.

All three major U.S. stocks posted robust gains. The tech-heavy Nasdaq led the pack, rising 2% with an assist from Apple shares following the iPhone maker’s record share buyback announcement.

European shares

European shares notched their biggest one-day gain since a week ago on Friday, driven by gains in the technology sector, while banks dropped to over a week’s low, weighed down by Societe Generale following a dismal forecast.

The pan-European STOXX 600 index rose 0.4%, boosted by a 1.6% gain in the technology sector following an upbeat quarterly sales forecast from U.S-based Apple.

Tech View: Doji candle

Nifty on Friday ended 172 points lower to form a Doji candle on the weekly chart which indicates indecisiveness prevailing in the marketplace at the current juncture.

Technically, the Nifty closed below the level of 22,500 which has been acting as a minor support for the last couple of days. While this is a negative development it’s not something that opens a big downside, Tejas Shah of JM Financial & BlinkX said.

Nifty is likely to remain volatile within the 22,200–22,800 range in the near term.

Stocks showing bullish bias

Momentum indicator Moving Average Convergence Divergence (MACD) showed bullish trade on the counters of Shree Cements, Triveni Turbine, Fortis Healthcare, Cadila Healthcare, Radico Khaitan, and Berger Paints 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 360 One Wam, Alkyl Amines, Vijaya Diagnostic, Sumitomo Chemical, Orient Refractories, and Asahi India Glass 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

Bajaj Finance (Rs 4,870 crore), Kotak Mahindra Bank (Rs 2,512 crore), RIL (Rs 2,477 crore), HDFC Bank (Rs 2,423 crore), Coal India (Rs 2,382 crore), ICICI Bank (Rs 2,277 crore), and SBI (Rs 1,876 crore) among others 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: 6.2 crore), Coal India (Shares traded: 5.1 crore), ONGC (Shares traded: 2.8 crore), Power Grid (Shares traded: 2.7 crore), NTPC (Shares traded: 2.7 crore), ITC (Shares traded: 2.2 crore), and SBI (Shares traded: 2.2 crore) among others were among the most traded stocks in the session on NSE.

Stocks showing buying interest

Shares of Grasim Industries, ONGC, M&M, Shriram Finance, SBI, Tata Steel, and NTPC among others witnessed strong buying interest from market participants as they scaled their fresh 52-week highs, signaling bullish sentiment.

Stocks seeing selling pressure

Shares of Kotak Bank hit their 52-week lows, signaling bearish sentiment on the counters.

Sentiment meter favours bears

Overall, market breadth favoured bears as 2,411 stocks ended in the red, while 1,421 names settled in the green.

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