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

Indian benchmark equity indices closed lower on Friday as investors booked profits after a week of record highs in blue-chip indices. The Nifty 50 fell 0.14% to 26,179 points, while the BSE Sensex fell 0.3% to 85,571.

Both indices posted weekly gains with the Nifty up 1.5% and the Sensex up 1.2%, marking their third consecutive week of gains.

Here’s how analysts pulse the market:

“The Nifty took a breather after a few days of sustained upswing. Sentiment remains strong as the index continues to stay above important moving averages. This strength is likely to sustain till it remains above 25,900. At the higher end, a fresh if Nifty closes at 26,300 , it could potentially go up to 26,600,” said Rupak De of LKP Securities.

Hrishikesh Yedve of Asit C Mehta Investment Intermediates said, “Technically, on a daily basis the index has formed a small red candle and on a weekly scale the index has formed a large green candle. Moreover, on a weekly scale the index has been successful. Above the breakout of rising channel pattern Close, which in the short term, should adopt a strategy above 26,500 as long as the Nifty remains above the breakout level of 26,500, the short-term target for the index.”

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

US Market:
The blue-chip Dow Jones industrial average closed at a record high as a subdued inflation report stoked hopes of more Federal Reserve rate cuts, which also boosted small-cap stocks and enabled Wall Street’s three main indexes to post weekly gains.

The technology-heavy Nasdaq slipped for the day while the S&P 500 was slightly lower, but both indexes held near recent record highs.

The Dow Jones Industrial Average rose 0.33% to 42,313, the S&P 500 fell 0.13% to 5,738 and the Nasdaq Composite lost 0.39% to 18,119.

European share:
Europe’s STOXX 600 share index closed at a record high on Friday as companies and sectors exposed to China continued to rally after Beijing unveiled a raft of stimulus measures this week, with luxury companies the biggest gainers.

The pan-European STOXX 600 closed up 0.5% at 528.08, taking its gains for the week to more than 2%. Luxury companies LVMH and Richemont rose 3.7% and 2.7% respectively.

Take View: Small negative candlestick
The Nifty50 index formed a small negative candlestick at new highs on the daily chart, indicating a breathing-type pattern after an upside breakout. As has happened in the past, the market is expected to shift into range-bound action for a few sessions before witnessing another upside breakout.

On the weekly chart, it has formed a long bull candle which is the third candle in a row. Technically, this weekly market action suggests a bullish ‘Three Advancing Soldiers’ type pattern that signals a continuation of the uptrend.

The market’s near-term uptrend remains intact with Nifty finally likely to bounce after consolidation in the next few sessions. Nagaraj Shetty of HDFC Securities said the immediate support is 25,900.

In open interest (OI) data, the highest OI on the call side was seen at 26,200 and 26,300 strike prices, while on the put side, the highest OI was at 26,200 strike price followed by 26,100.

Stocks Showing Bullish Bias:
Momentum indicator Moving Average Convergence Divergence (MACD) showed bullish trade on counters of BPCL, SJVN, Phillips Carbon, Brigade Enterprises, Sundaram Finance and Amara Raja Energy & Mobility.

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 Balakrishna Industries, Kfin Technologies, Jubilant Food, M&M Financial, Nuvoco Vistas Corp and BEML. A bearish crossover on MACD on these counters indicates that they have started their downward journey.

Most active stocks by value:
Trent (Rs 8,758 crore), Divini Labs (Rs 3,752 crore), LTIMindtree (Rs 3,236 crore), Infosys (Rs 2,872 crore), NTPC (Rs 2,356 crore), Jio Financial Services (Rs 2,205 crore) , and M&Ms (Rs. 2,205 crore), and M&M. crore) were 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: 112.2 crore), Shree Renuka Sugars (shares traded: 25.3 crore), Easy Trip Planners (shares traded: 12 crore), Canara Bank (shares traded: 11.8 crore), Yes Bank (shares traded: 6.4 crore ), Jio Financial Services (shares traded: 6.1 crore), and Zomato (shares traded: 5.9 crore) among others were among the most traded stocks of the session on NSE.

Stocks showing interest in buying:
Shares of Balrampur Chinese, BPCL, Bombay Burma, Phillips Carbon, Praj Industries, Aditya Birla Retail and Sundaram Finance witnessed strong buying interest from market participants as they scaled their fresh 52-week highs, indicating bullish sentiment. .

Selling Pressure in Stocks:
Shares of CSB Bank hit their 52-week low, signaling bearish sentiment over the counter.

Sentiment Meter Bear:
Overall, market breadth favored the bears as 2,017 stocks ended in the red, while 1,932 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)