Ahead of the market: 10 things that will determine stock action on Friday

Indian benchmark equity indices fell for a third straight session on Thursday, with Bajaj Auto warning of weak festive sales, higher stock valuations and concerns about ongoing foreign fund inflows.

The 30-share BSE Sensex closed down 495 points, or 0.61%, at 81,006, while the broader NSE Nifty shed 221 points, or 0.89%, at 24,749.8. The Nifty50 also touched a two-month low during the session.

Here’s how analysts read the pulse of the market:
“Nifty has found initial support in the 24,700–24,750 zone. On the daily chart, Nifty has broken out of the bearish flag pattern, indicating a possible downward move in the short term. The RSI is showing a bearish crossover and is falling. However, to initiate a short position This may not be the ideal level, as the index has seen a sharp correction and is close to the double bottom support, which could trigger a decisive decline below 25,000 leading to a significant correction in the market,” said Rupak De of LKP Securities.

Tejas Shah of JM Financial & BlinkX said, “Technically, the Nifty index was consolidating in a narrow range ie between 25,250 to 24,950 for the past few days and gave a mini breakdown in today’s trading session after closing below the 24,950 level. Nifty Support is now seen at 24,700-750 and 24,500, the immediate psychological resistance for Nifty is at 25,000 mark and the next critical resistance zone is at 25,250-300 level going forward.”

That said, here’s a look at what some key indicators suggest for Friday’s action:

US Market:
U.S. stocks edged closer to record highs on Thursday, buoyed by signs of a resilient economy. The S&P 500 rose 0.1% in midday trade, nearing its record high earlier this week. The Dow Jones Industrial Average added 99 points, or 0.2%, continuing its climb from an all-time high set earlier in the day, while the Nasdaq Composite was up 0.2% by 11 a.m. ET.

Nvidia and other companies in the chip sector led the charge, following a stronger-than-expected quarterly profit from the Taiwanese semiconductor manufacturing company. TSMC attributed its success to strong demand for smartphones and artificial intelligence, which resulted in a 13.1% jump in its US stock.

Meanwhile, Treasury yields rose in the bond market, reflecting recent positive economic reports.

European Stocks:
European stocks held on to their gains on Thursday after the European Central Bank announced a widely expected 25-basis-point rate cut, although it did not provide new guidance on future actions.

The STOXX 600 index was up 0.7% at 1225 GMT, recovering from two days of declines.

The latest cut marks the ECB’s second consecutive cut of 25 basis points, the bank’s first in 13 years.

Tech View:
On the daily chart, the Nifty has formed a large red candle, indicating weakness. However, the index is approaching the previous demand zone of 24,690.

If Nifty sustains below 24,690 level, further downside is likely to take it towards 24,500-24,400 levels. On the upside, immediate resistance is located at the psychological level of 25,000, followed by the 21-day exponential moving average (21-DEMA) at 25,185, said Asit C. Hrishikesh Yedve of Mehta Investment Intermediates said.

In open interest (OI) data, the highest OI was seen at 24,750 and 254,800 strike prices on the call side, while on the put side, the highest OI was seen at 24,750 strike price followed by 24,700.

Stocks Showing Bullish Bias:
Momentum Indicator Moving Average Convergence Divergence (MACD) showed bullish trade on counters of Kalyani Investment Company, Garwar Technical Fibers, Shriram Pistons, Rainbow Children’s Medicare, Naveen Florin, Godrej Properties and Goldium International.

MACD is known for signaling trend reversals in traded securities or indices. When 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 further weakness:
MACD showed bearish signals on counters of Kaycee Industries, Trent, Coforge, Solex Energy, LTIMindtree, eClerx Services and Blue Dart Express. A bearish crossover on MACD on these counters indicates that they have started their downward journey.

Most active stocks by value:
Bajaj Auto (Rs 3,821 crore), RIL (Rs 2,113 crore), Mphasis (Rs 1,633 crore), Infosys (Rs 1,968 crore), BSE (Rs 1,584 crore), Angel One (Rs 1,534 crore), and SBI (Rs 1,510 crore) ) are among the most active stocks on the NSE in terms of value. High activity on a counter in terms of value can help identify counters with the highest trading turnover in a day.

Most active stocks in terms of volume:
JP Power (shares traded: 10.1 crore), Yes Bank (shares traded: 4.9 crore), Nalco (shares traded: 4.9 crore), Suzlon Energy (shares traded: 3.2 crore), Tata Steel (shares traded: 2.8 crore), Zomato (Shares Traded: 2.5 Crore), and Central Bank (Shares Traded: 2.4 Crore) among others were among the most traded stocks of the session on NSE.

Stocks showing interest in buying:
Shares of Tech Mahindra, CAMS, Firstsource, Gujarat Fluorochemicals, Elicon Engineering, GE T&D India and Oberoi Realty saw strong buying interest from market participants as they scaled their fresh 52-week highs, indicating bullish sentiment.

Selling Pressure in Stocks:
Shares of Equitas Small Finance Bank hit their 52-week low, signaling bearish sentiment on the counter.

Sentiment Meter Bear:
Overall, market breadth favored the bears as 2,690 stocks ended in the green, while 1,272 names settled in the red.

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