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

Benchmark indices Sensex and Nifty50 hit record highs on Thursday, buoyed by commodity stocks amid expectations of China cutting mortgage interest rates to boost consumption.

The Nifty closed up 1.89% at 25,388, while the Sensex gained 1.77% at 82,962. Both benchmarks also closed higher during the session, their best since early June.

Here’s how analysts read the pulse of the market:
“The Nifty has broken out of its recent consolidation on the daily chart, indicating rising optimism. Further, the index is holding above the crucial 21-day EMA, the near-term moving average. The RSI on the daily chart is showing a bullish crossover, reinforcing the positive sentiment. As the index closed above the recent consolidation, it is likely to continue towards the 25,470-25,500 range, while support is seen at 25,100,” said Rupak De of LKP Securities.

Tejas Shah of JM Financial & BlinkX said, “The bullishness is likely to continue and Nifty may test the resistance zone of 25,500-550 in the next two days. Support for Nifty is now seen at 25,150-200 and 24,950. 25,050 on the upside, Immediate resistance for Nifty is at 25,400 mark and next resistance zone is at 25,500-550 level.”

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

US Market:
Wall Street showed little movement as stronger-than-expected producer price data led to a 25-basis point rate cut by the Federal Reserve. The producer price index (PPI) for final demand rose 0.2% in August, beating the 0.1% estimate, while the core PPI rose 0.3% against a forecast of 0.2%.

Initial claims for state jobless benefits were 230,000 for the week ending Sept. 7, matching expectations. Moderna’s shares fell 17.8% to their lowest level since November following a disappointing revenue forecast for next year.

Despite recent economic data, traders now expect an 85% chance of a 25-bps rate cut by the Fed at its next meeting.

European Stocks:
European shares rose on Thursday after the European Central Bank (ECB) cut interest rates once more, with inflation nearing its 2% target and the economy teetering on the brink of recession.

The pan-European STOXX 600 index rose 0.8% to 511.98 points, a one-week high. All regional stock markets posted strong gains, except for utilities, which saw a slight decline of 0.1%.

The ECB cut its deposit rate by 25 basis points to 3.50%, following a similar cut in June, benefiting most sectors across Europe.

Tech View:
The Nifty formed a bearish candle as the bulls took charge at the end of the day and took the indices to new highs.

“A long bull candle was formed on the daily chart which has broken above the critical barrier and range movement around the 25200 level. Technically, this pattern signals a critical upside breakout of the important resistance zone at 25360 (1.382% Fibonacci extension). This is a positive sign,” said Nagaraj Shetty of HDFC Securities.

In open interest (OI) data, the highest OI on the call side was seen at 25,400 and 25,500 strike prices, while on the put side, the highest OI was seen at 25,400 strike price followed by 25,300 and 25,350.

Stocks Showing Bullish Bias:
Momentum indicator Moving Average Convergence Divergence (MACD) showed bullish trade on counters of Page Industries, Apollo Hospitals Enterprise, Shriram Finance, Hitachi Energy India, Blue Dart Express, IPCA Laboratories and Polycab.

MACD is known for indicating the opposite trend 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 the counters of Tata Investment Corporation, Bombay Burma Trading Corporation, Caplin Point Laboratories, Vedanta Fashions, Sundaram Finance and Gujarat State Petronet. A bearish crossover on MACD on these counters indicates that they have started their downward journey.

Most active stocks by value:
RIL (Rs 3,274 crore), Zomato (Rs 2,864 crore), HDFC Bank (Rs 2,690 crore), Honasa Consumer (Rs 2,529 crore), Tata Motors (Rs 2,499 crore), Granules India (Rs 2,266 crore) ), and Canes Technology (Rs 2,014 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:
Vodafone Idea (shares traded: 40.8 crore), Suzlon Energy (shares traded: 18.6 crore), Zomato (shares traded: 12.1 crore), Yes Bank (shares traded: 9.5 crore), Tata Steel (shares traded: 7.3 crore), Honasa Consumer (shares traded: 5.1 crore), and Granules India (shares traded: 3.8 crore) among others were among the most traded stocks of the session on NSE.

Stocks showing interest in buying:
Other stocks including Gujarat Fluorochemicals, Century Textiles, FDC, Kalyan Jewellers, Zomato, Bharti Airtel and BLS International Services saw strong buying interest from market participants as they scaled their fresh 52-week highs, indicating bullish sentiment. is

Selling Pressure in Stocks:
No major stocks hit their 52-week lows on Thursday.

Sentiment Meter Bulls Bears:
Overall, market breadth favored the bulls as 2,295 stocks ended in the green, while 1,657 names settled in the green.

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