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

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NEW DELHI: Uncertainties again creeped in on Dalal Street as hawkish US Federal Reserve and worsening pandemic put bulls on backfoot and snapped four day winning run.

Here’s how analysts read the market pulse:-

The index has negated its formation of higher high-low after four sessions, said Chandan Taparia of Motilal Oswal Securities, who believes the index has to hold above 17,777, for an upmove towards 18,000. Taparia sees support for the index at 17,600.

Mazhar Mohammad of Chartviewindia.in said it looks critical for the index to sustain above Thursday’s intraday low of 17,655 to retain bullish bias. In that scenario, a sideways consolidation can be expected. A breach of 17,655 may drag the index towards its 50-day moving average, whose value is placed around 17400 levels.

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

US shares open on tepid note

US stocks were mixed in early trading Wednesday as traders awaited the minutes of the latest Federal Reserve meeting that could signal when the central bank is likely to hike interest rates.

About 25 minutes into trading, the benchmark Dow Jones Industrial Average was on the positive side of flat at 36,810.42, a few points higher than its record close Tuesday.

The tech-rich Nasdaq Composite Index was down 0.4 per cent at 15,563.36, while the broad-based S&P 500 fell 0.1 per cent to 4,789.20.

European stocks sink
European stocks sank more than 1%. The pan-European STOXX 600 index lost 1.1% and was set to erase most of its gains made in a rally that pushed it to record highs in the first three sessions of the year.

Benchmarks in London and Frankfurt opened down more than 1% while Tokyo lost nearly 3%.

In early trading, the FTSE 100 in London lost 1.1% to 7,435.95. Frankfurt’s DAX fell 1.4% to 16,046.83 and the CAC 40 in Paris sank 1.6% to 7,255.16.

Tech View: Indecisive Doji
Nifty50 on Thursday saw a gap-up start but eventually ended the day around the same levels, thus making an indecisive Doji candle on the daily chart. The long lower wick, as was seen in the last couple of sessions, suggested intraday selling was bought into after the index tested its 5-day moving average. Analysts said the index may see some consolidation going ahead.

F&O: Bear pressure increases
In the derivatives segment, punters continued to accumulate in the range of 17,750-17,400, bears are not leaving any stone unturned to keep pressure on the indices.

Stocks showing bullish bias
Momentum indicator Moving Average Convergence Divergence (MACD) showed bullish trade setup on the counters of Alok Industries, Future Retail, Religare Enterprises, Future Lifestyle, Reliance Infra and Elgi Equipments.

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 Infosys, Tech Mahindra, Future Enterprises, MMTC, Max Healthcare, Sobha and Persistent Systems. Bearish crossover on the MACD on these counters indicated that they have just begun their downward journey.

Most active stocks in value terms
Reliance Industries (Rs 1,616 crore), Bharti Airtel (Rs 1,540 crore), HDFC (Rs 1,211 crore), Bajaj Finance (Rs 1,779 crore), Infosys (Rs 1,169 crore), ICICI Bank (Rs 1,018 crore) and SBI (Rs 892 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 highest trading turnovers in the day.

Most active stocks in volume terms
Vodafone Idea (Shares traded: 30 crore), YES Bank (Shares traded: 13 crore), Suzlon Energy (Shares traded: 12 crore), Alok Industries (Shares traded: 6 crore), RBL Bank (Shares traded: 5 crore), and NBCC (Shares traded: 5 crore) were among the most traded stocks in the session.

Stocks showing buying interest
Magma Fincorp, KPIT Tech, Tata Teleservices, Thermax, Page Industries, Balrampur Chini Mills and KPR Mill witnessed strong buying interest from market participants as they scaled their fresh 52-week highs, signaling bullish sentiment.

Stocks seeing selling pressure
Paytm, Dodla Dairy, Policybazaar and IITL Projects witnessed strong selling pressure and hit its 52-week lows, signaling bearish sentiment on the counter.

Sentiment meter favours bulls
Overall, market breadth was in favour of gainers as 1,981 stocks ended in the green, while 1,401 names settled with cuts.

Podcast: Factors that can drive markets in the near-term

Bulls took a break on Thursday as the domestic equity market snapped its four-day winning streak, thanks to heavy selling pressure. The hawkish tone of the Federal Reserve and signal of an early rate hike dampened the sentiments across the globe, including India. Index heavyweights were most hit as traders expect the Reserve Bank to tighten the money supply. Also, the rising Covid-19 cases are adding to their woes. Investors are waiting for the results season to kick off for the December 2021 quarter. Apart from Budget and Q3 earnings, which other factors can drive markets in the near term?