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

Indian benchmark equity indices rose to higher levels on Friday and posted weekly gains as a massive interest rate cut by the US Federal Reserve earlier in the week boosted risk appetite of investors across global markets.

The NSE Nifty 50 rose 1.48% to 25,790 and the S&P BSE Sensex rose 1.63% to 84,544, a record closing high.

The Sensex also touched above 84,000 for the first time on Friday. For the week, the Nifty and Sensex rose 1.7% and 2% respectively, their fifth weekly gain in six.

Here’s how analysts pulse the market:

“On the daily chart we can observe that the Nifty is consolidating around the range of 24,200 – 24,150 where the 40 day average is placed. The structure is still weak and the negative crossover with the momentum indicators is also supporting our bearish trend. If A move towards key moving averages 24,250 – 24,300 should be used as a selling opportunity for targets of 23,890 – 23,600, 24,300 being an immediate barrier from a short-term perspective,” said Jatin Gedia of Shares.

Tejas Shah of JM Financial & BlinkX said, “The Nifty index also closed above the critical resistance zone of 25,500-550 this week and we expect the upward trending activity to continue and the Nifty should move towards the next psychological resistance of 26,000. From current levels or support for Nifty now seen at 25,500-550, overall, further follow-up strength may be expected in today’s trading session.”

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

US Market:

US stocks closed almost unchanged on Friday, as investors held off buying after a strong rally in the previous session that was spurred by further interest rate cuts by the Federal Reserve, while Nike’s gains helped push the Dow to a record.

After recording their biggest daily percentage gain since mid-August, the major averages were subdued for most of the session, but managed to secure weekly gains of at least 1%.

Stocks fell briefly after Fed Governor Christopher Waller’s comments raised expectations that the central bank would cut interest rates by 50 basis points at its November meeting, only down 50 bps on Wednesday.

European share:

The US European shares slipped on Friday after a boost in the previous session driven by the Federal Reserve’s outsized interest rate cut, while drugmaker Novo Nordisk slipped on disappointing obesity pill data.

The pan-European STOXX 600 index closed 1.4% lower, though it posted a second straight week of gains.

All major European stock markets were heavy losers except Spain, which closed 0.2% lower.

Tech View: Long bull candle

Nifty has formed a long bull candle, which indicates a decisive upside breakout in the market from the range movement of the last 4-5 sessions. The trend line resistance has been broken above the Nifty range and around the 25,500 level.

A long bull candle was formed on the daily chart. The short term trend of Nifty is strongly positive. After a bounce in a session on Friday, a consolidation/breather pattern is likely in the short term before moving further. Next upside targets as per Fibonacci extension to look around 26250. Immediate support is at 25650, said Nagaraj Shetty of HDFC Securities.

In open interest (OI) data, the highest OI on the call side was seen at 25,800 and 26,000 strike prices, while on the put side, the highest OI was at 25,700 strike price followed by 25,600 and 25,800.

Stocks Showing Bullish Bias:

Momentum indicator Moving Average Convergence Divergence (MACD) showed bullish trade on counters of Cochin Shipyard, Mazagon Dock Shipbuilders, IRB Infra Developers, Phoenix Mills, Bajaj Holdings and Saman Capital.

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 counters of Usha Martin, Anand Rathi Wealth, Paytm, YES Bank, FACT and LTIMindtree. A bearish crossover on MACD on these counters indicates that they have started their downward journey.

Most active stocks by value:

ICICI Bank (Rs 9,753 crore), HDFC Bank (Rs 5,257 crore), RIL (Rs 4,589 crore), Bharti Airtel (Rs 3,686 crore), M&M (Rs 3,655 crore), Kotak Mahindra Bank (Rs 3,582 crore), and Infosys (Rs. 3,582 crore) Rs. 2,899 crore) was one of 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: 152.8 crore), IRB Infra Developers (Shares traded: 13 crore), Zomato (Shares traded: 8.4 crore), GMR Infra (Shares traded: 8.2 crore), Yes Bank (Shares traded: 7.8 crore), The session on NSE included Suzlon Energy (shares traded: 7.4 crore), and ICICI Bank (shares traded: 7.3 crore).

Stocks showing interest in buying:

Shares of Concorde Biotech, Asahi India Glass, Max Healthcare, BSE, Shyam Metallics, JSW Energy and Inox Wind witnessed strong buying interest from market participants as they scaled their fresh 52-week highs, indicating bullish sentiment. .

Selling Pressure in Stocks:

Shares of Gujarat Ambuja Exports and Vodafone Idea hit their 52-week lows, signaling bearish sentiment on the counter.

Sentiment Meter Bulls:

Overall, market breadth favored the bulls as 2,383 stocks ended in the green, while 1,572 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)