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

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MUMBAI: Nifty50 formed a bearish candle on the daily chart on Wednesday as the market saw selling pressure for the second successive day.

Here’s how analysts read the market pulse:

Nagaraj Shetti, Technical Research Analyst, HDFC Securities said the weakness seems to have gathered strength in the last couple of sessions. This is not a good sign for bulls to make a sharp comeback.

Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities said while the intraday texture is weak, for bulls the 50-day SMA at 17,790 could act as a key support level. For day traders, below 18000 could, the correction wave is likely to continue up to 17,850-17,790.

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

Wall St dips on rate hike uncertainty

Wall Street indexes fell on Wednesday as investors fretted over early rate hikes by the Federal Reserve after strong retail earnings, while Visa weighed on the Dow after Amazon said it would stop accepting cards issued by the operator in the UK. At 10:06 a.m. ET, the Dow Jones Industrial Average was down 0.35 per cent or 124.76 points at 36,017.46 and the S&P 500 was down 11.28 points, or 0.24 per cent, at 4,689.62. The Nasdaq Composite was down 27.25 points, or 0.17 per cent, at 15,946.61.

European shares extend their gains

The pan-European STOXX 600 index continued its winning streak as the headline index gained 0.18 per cent to 490.10

Tech View: Overall structure remains bearish

Analysts said that the Nifty50 was at risk of negating the positive pattern of higher highs and lows if it were to move below 17,800 points going ahead. The major cause of worry is that the markets witnessed selling pressure at higher levels as investors seem to be trimming their holdings in stocks that had risen sharply in the recent upsurge, said analysts.

F&O: Selling may exacerbate

In the derivatives segment, traders continued to buy out-of-money put options of the Nifty50 index indicating that they expect more selling pressure ahead. The 17,800 strike price put option saw the highest addition of open interest suggesting that traders expect the index to test that level going ahead.

Stocks showing bullish bias

Momentum indicator Moving Average Convergence Divergence (MACD) showed bullish trade setup on the counters of Bharti Airtel, IRCTC, SBI Life, Borosil, and Laurus Labs.

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 signalling weakness ahead

The MACD showed bearish signs on the counters of RBL Bank, TV18 Broadcast, Petronet LNG, Indus Towers, and Hindustan Petroleum. A bearish crossover on the MACD on these counters indicated that they have just begun their downward journey.

Most active stocks in value terms

Apollo Hospitals (Rs 3667 crore), Tata Motors (Rs 2579 crore), Maruti Suzuki (Rs 1953 crore), Tata Power (Rs 1470 crore), Axis Bank (Rs 1297 crore), RIL (Rs 1168 crore), ITC (Rs 1125 crore), Tata Steel (Rs 1075 crore), SBI (Rs 1025 crore) and PB Fintech (Rs 998 crore) were among the most active stocks on Dalal Street 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

Vodafone Idea (Shares traded: 11.4 crore), Tata Power (Shares traded: 5.9 crore), Tata Motors (Shares traded: 4.8 crore), ITC (Shares traded: 4.7 crore), Zomato (Shares traded: 4.5 crore), Trident (Shares traded: 3.9 crore), PNB (Shares traded: 3.7 crore), Bank of Baroda (Shares traded: 3.66 crore), and YES Bank (Shares traded: 3.3 crore) were among the most traded stocks in the session.

Stocks showing buying interest

Apollo Hospitals, Birlasoft, Rajesh Exports, PB Fintech, Home First Finance and Lux Industries witnessed strong buying interest from market participants as they scaled their fresh 52-week highs, signaling bullish sentiment.

Stocks seeing selling pressure

Amara Raja Batteries, Aditya Birla Sun Life AMC, P&G Health, and Bayer Cropscience witnessed strong selling pressure and hit their 52-week lows, signaling bearish sentiment on these counters.

Sentiment meter favours bears

Overall, the market breadth remained in favour of the bears. As many as 184 stocks on the BSE500 index settled the day in the green, while 316 settled the day in the red.

Podcast: Which sectors are showing value in this market?

Pharma, realty and private lender stocks were among the top losers while auto players bucked the weak trend. BSE barometer gyrated in the range of 500 points to finally close the session 314 points down, a tad above the 60,000 mark. It has dropped nearly 700 points in just two sessions. Its broader peer Nifty50 bled over 100 points to settle a couple of points below 17,900. Which sectors are showing value in the current market?