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

Even as most Asian markets ended on a weak note, Indian equities managed to pair day’s gains as July wholesale inflation contracted year-on-year. Nifty ended a tad higher at 19,434, up 6 points, while Sensex gained 79 points to settle at 65,402. Meanwhile, given the selling pressure in PSU bank stocks, Nifty Bank ended in the red. Today, the markets were shut for trading on account of Independence Day.

Here’s how analysts read the market pulse:

“Following weak performances in Asian markets, the domestic indices commenced the day with a negative bias, prompted by discouraging domestic industrial data along with concerns over demand from China. However, the indices managed to recover from their initial losses, ending the day on a relatively neutral note. India’s wholesale inflation persisted in negative territory, albeit moderating to -1.36%, as the decline in fuel prices was counterbalanced by higher food costs. India’s CPI inflation, due to be released today, is anticipated to exceed the RBI’s tolerance level of 6% due to mounting pressure from elevated food prices,” Vinod Nair, Head of Research at Geojit Financial Services, said.

“Nifty recovered after a two-day fall, but made a lower top, lower bottom formation. It has formed a high wave type pattern suggesting a small bounce. 19563-19576 band could be the next resistance while the 19201-19234 band could offer support in the near term,” Deepak Jasani, Head of Retail Research, HDFC Securities, said.

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

US market opens lower
Wall Street’s main indexes opened lower on Tuesday after a sharper-than-expected rise in U.S. retail sales stoked concerns the Federal Reserve could keep interest rates higher for longer.

The Dow Jones Industrial Average fell 88.26 points, or 0.25%, at the open to 35,219.37. The S&P 500 opened lower by 10.85 points, or 0.24%, at 4,478.87, while the Nasdaq Composite dropped 27.85 points, or 0.20%, to 13,760.48 at the opening bell.

European shares decline
UK and Swedish stocks led declines among European peers on Tuesday after data from both countries triggered worries about high-interest rates, while China-exposed shares fell as Beijing’s policy support did little to boost confidence.

The pan-European STOXX 600 index lost 1% touching a more than one-month low, while both London’s FTSE 100 and Stockholm stocks fell over 1%.

Tech View: Small positive candle
A small positive candle was formed on the daily chart with upper and long lower shadow. Technically, this pattern indicates a formation of high wave type candle pattern. Normally, such high wave formation after a reasonable decline or upside calls for impending trend reversal. Having declined recently, the chances of upside bounce are likely in the coming sessions.

Stocks showing bullish bias
Momentum indicator Moving Average Convergence Divergence (MACD) showed bullish trend on the counters of South Indian Bank, UCO Bank, NMDC, RIL and Punjab and Sind Bank among others.

The MACD is known for signalling 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 signalling weakness ahead
The MACD showed bearish signs on the counters of PFC, Tata Power, Adani Enterprises, Biocon and Ujjivan Financial among others. A 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 2518 crore), Adani Enterprises (Rs 2398 crore), ICICI Bank (Rs 1819 crore) and SBI (Rs 1577 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 the highest trading turnovers in the day.

Most active stocks in volume terms
IRFC (Shares traded: 24.06 crore), Suzlon Energy (Shares traded: 11.05 crore), Bank of Maharashtra (Shares traded: 9.03 crore), YES Bank (Shares traded: 8.47 crore) and Vodafone Idea (Shares traded: 8.42 crore), and among others and were among the most traded stocks in the session on NSE.

Stocks showing buying interest
Shares of J&K Bank, Kalyan Jewellers, Motilal Oswal PTC Industries and Kirloskar Oil among others witnessed strong buying interest from market participants as they scaled their fresh 52-week highs, signalling bullish sentiment.

Stocks seeing selling pressure
Shares of Vedanta, UPL, Viji Finance, Vinny Overseas and BKM Industries among others stocks that hit their 52-week lows, signaling bearish sentiment on the counters.

Sentiment meter favours bears
Overall, market breadth favoured bears as 2,175 stocks ended in the red, while 1,553 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)


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