Ahead of Market: 12 things that will decide stock action on Wednesday

NEW DELHI: Nifty had a gap-up opening on Monday but ended up shedding almost a per cent in intraday trade. The headline index formed a long bearish candle on the daily charts as the 50 pack continued it’s losing streak in the third consecutive session.

Analysts expect volatility to remain high in the coming two sessions as the January derivatives contracts are scheduled to expire on Thursday.

Rohit Singre, Senior Technical Analyst at LKP Securities said: “The index has breached all good support which means if the index manages to sustain below today’s (Monday’s) low, then the index may hit 14,000 mark soon which is a strong support on the downside. On the higher side, the index found good resistance in the 14350-14440 zone and it would be the profit booking level for longs.”

“Indian markets witnessed a highly volatile trade and closed in red due to a weak global market and reports of Indo-China border tension. The downside was contributed by all the sectors except pharma which traded in the green. Policy decisions of the US Fed meeting which will commence tomorrow will drive the global market in the coming days. We have seen Indian markets being highly volatile and the trend is expected to continue this week as we inch closer to the Union Budget,” 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 Wednesday’s action:

US stocks: S&P opens at record high

The S&P 500 hit a record high at the open on Tuesday, helped by positive earnings updates from a slew of companies including General Electric and Johnson & Johnson, while the Federal Reserve kicked off its two-day policy meeting. The Dow Jones Industrial Average rose 8.5 points, or 0.03%, at the open to 30968.55. The S&P 500 rose 7.6 points, or 0.20%, at the open to 3862.96, while the Nasdaq Composite rose 45.7 points, or 0.34%, to 13681.717 at the opening bell.

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European shares rise
Gains in financial services and chemical sectors helped European stocks rise on Tuesday after two straight sessions of declines, with Swiss wealth manager UBS jumping after posting a surge in quarterly net profit. The pan-European STOXX 600 index rose 0.8%, with the German DAX gaining 1.5%, France’s CAC 40 up 1.1% and UK’s FTSE 100 adding 0.7%.

Tech View: ‘Three Black Crows’ formation on the daily chart

Nifty50 on Monday fell below its five-day, 13- and 20-day simple moving averages, which resulted in a ‘Three Black Crows’ formation on the daily chart. The index also formed lower highs and lows for the second straight session. Support levels also shifted lower, with analysts suggesting a weak momentum ahead.

Check out the candlestick formations in the latest trading session

With tech view on 12 things

F&O: Rising VIX not a good sign

India VIX moved up 3.68 per cent from 22.42 to 23.24 level. Volatility needs to cool down below 20 level to help the bulls get a grip. However, volatility could be comparatively higher ahead of Budget 2021 and that may sustain the volatile swings and limit the upside. On the options front, maximum Put open interest stood at 14,000 level followed by 14,200, while maximum Call OI was seen at 15,000 followed by 14,500 level. Call writing was seen at strike prices 14,400 and 14,500 while there was Put writing at 14,200 and 14,100 levels. Options data suggested a wider trading range between 14,000 and 14,600 levels, while the immediate trading range is seen between 14,100 and 14,400 levels.

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Stocks showing bullish bias

Momentum indicator Moving Average Convergence Divergence (MACD) on Monday showed bullish trade setup on the counters of Grasim Industries, IIFL Finance, Century Plyboards, Bajaj Finserv, Omax Auto, Trent Ltd, Sharda Cropchem, Godrej Industries, Surya Roshni, Salasar Techno Engineering, PG Electroplast, P&G Health, Jash Engineering, Garware Technical Fibres, Maha Scooters and Sintercom India.

Stocks signalling weakness ahead

The MACD showed bearish signs on the counters of Vodafone Idea, DLF Ltd, IDFC, Tata Motors, Adani Ports & SEZ, Bank of Maharashtra, Lupin Ltd, Mahindra & Mahindra, Jammu & Kashmir Bank, Polycab India, Kansai Nerolac Paint, CESC, KNR Constructions, IRB Infrastructure, Hindustan Aeronautics, FACT, Greenpanel Industries, AU Small Finance Bank, Gabriel India, Tata Steel Long Products, Repco Home Finance, Metropolis Healthcare, Redington (India), Shalimar Paints, KEI Industries, Newgen Software, PTL Enterprises, eClerx Services, Zodiac Clothing, Sagar Cements, AIA Engineering, Mahamaya Steel Industries, Tata Investment, Sheela Foam, Sirca Paints India and Kaya.

Monday’s most active stocks

RIL (Rs 4918.86 crore), Tata Motors (Rs 4678.78 crore), HDFC (Rs 2026.85 crore), Bajaj Finance (Rs 1845.39 crore), UltraTech Cement (Rs 1817.51 crore), Grasim Industries (Rs 1649.55 crore), HDFC Bank (Rs 1491.17 crore), Aurobindo Pharma (Rs 1456.14 crore), Axis Bank (Rs 1406.14 crore) and ICICI Bank (Rs 1257.02 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: 46.19 crore), YES Bank (Shares traded: 32.62 crore), Tata Motors (Shares traded: 16.43 crore), PNB (Shares traded: 8.34 crore), Tata Power (Shares traded: 5.57 crore), Bank of Baroda (Shares traded: 5.34 crore), SAIL (Shares traded: 5.25 crore), BHEL (Shares traded: 5.17 crore), Apollo Tyres (Shares traded: 3.89 crore) and IDFC First Bank (Shares traded: 3.73 crore) were among the most traded stocks in the session.

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Stocks showing buying interest

Aurobindo Pharma, Grasim Industries, Century Plyboards, Sundaram Clayton and TVS Motor witnessed strong buying interest from market participants as they scaled their fresh 52-week highs on Monday signalling bullish sentiment.

Stocks seeing selling pressure

Mrs. Bectors Food Specialities, Jiya Eco-Products, Jump Networks 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 137 stocks on the BSE 500 index settled the day in green, while 361 settled the day in red.

Podcast: RIL drags down index, Top Q3 hits & misses so farstock market

Just one stock, Reliance Industries, accounted for over half of Sensex 531-point fall on Monday. The less-than-expected Q3 results by the oil-to-telecom major hit Mukesh Ambani’s personal fortunes by over $5 billion and helped Tata Group’s TCS race past Ambani’s flagship to become the most valued company on Dalal Street.


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