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

Indian benchmark equity indices touched lifetime highs for the fifth straight session on Wednesday, led by gains in heavyweight financials and energy stocks, while small-cap stocks fell for the second consecutive day.

The Nifty 50 closed up 0.25% at 26,004 points in the final hour of trade, while the BSE Sensex gained 0.3% at 85,169, both hitting all-time highs. At the start of the session, both the indices were down by 0.2%.

Here’s how analysts read the pulse of the market:

“The Nifty made another lifetime high as despite a weak start, the bulls were in no mood to bounce back. Sentiment is likely to remain positive till it stays above 25,900, where aggressive put writing was seen. Technically, the Nifty held firm. .Above its very short-term moving average, the momentum indicator does not see any reversal, so we can see a near-term positive move at 26200-26250,” said Rupak De of LKP Securities.

Hrishikesh Yedav, Asit C Mehta Investment Intermediates said, “Technically, the index is on the verge of crossing the upper trend line resistance of the channel pattern, which is around the 26,000 level range. If the index sustains above the 26,000 level, then it will cross the 26,200 level. As can be seen, 25,800 will act as short-term support for the index, hence, a buy-on-dips strategy should be adopted in Nifty for short-term.”

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

US Market:
Wall Street’s major indexes showed mixed results on Wednesday, with the S&P 500 hovering near record highs as investors looked for more signs about the economy and potential interest rate cuts.

The three major indexes were buoyed by monthly gains following the Federal Reserve’s recent interest rate cut, which boosted hopes of a soft landing. However, a disappointing consumer sentiment report released on Tuesday raised concerns about the strength of the labor market.

Eight of 11 S&P 500 sectors advanced, led by defensive sectors such as utilities and consumer staples. In contrast, energy stocks declined, shedding 0.9%.

Yields on longer-dated Treasury bonds rose amid fears that easing monetary conditions could fuel inflationary pressures.

European Stocks:
Europe’s STOXX 600 closed slightly lower on Wednesday, as energy stocks followed lower crude oil prices. Meanwhile, Germany’s SAP fell amid news of a US investigation into the software developer over allegations of price-fixing. The pan-European STOXX 600 index ended 0.1% lower, snapping a two-day streak of gains.

The oil and gas sector led the main STOXX sectors in losses, falling 1.7%. Crude oil prices fell more than 1% in the world’s biggest crude importer as investors reassessed the potential impact of China’s latest stimulus plans on its economy and fuel demand.

Tech View: Small positive candle
A small positive candlestick with a small upper shadow on the daily chart indicates a breathing action for the Nifty after a sharp rally. Nifty’s near-term uptrend position remains intact. One can expect more range bound action or minor decline in the next 1-2 sessions. Nagaraj Shetty of HDFC Securities said immediate resistance will be seen around 26250 and support is at 25800.

In open interest (OI) data, the highest OI on the call side was seen at 26,000 and 26,200 strike prices, while on the put side, the highest OI was seen at 25,900 strike price followed by 25,800.

Stocks Showing Bullish Bias:
Momentum indicator Moving Average Convergence Divergence (MACD) showed bullish trade on TVS Holdings, Ceat, Tata Communications, Ipca Laboratories and Dalmia India counters.

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 Page Industries, Bajaj Holdings, Coforge, Sundaram Finance, Radico Khaitan, Hawkins Cookers and Titan Company. A bearish crossover on MACD on these counters indicates that they have started their downward journey.

Most active stocks by value:
Easy Trip Planners (Rs 3,027 crore), HDFC Bank (Rs 2,843 crore), Power Grid (Rs 1,475 crore), IEX (Rs 1,465 crore), SBI (Rs 1,463 crore), Zomato (Rs 1,363 crore) ), and HEG (Rs 1,359 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:
Easy Trip Planners (shares traded: 83.7 crore), Vodafone Idea (shares traded: 38.6 crore), IEX (shares traded: 7.1 crore), PNB (shares traded: 7.1 crore), Zee Entertainment (shares traded: 5.9 crore), Tata Steel (shares traded: 5.8 crore), and Yes Bank (shares traded: 5.6 crore) among others were among the most traded stocks of the session on NSE.

Stocks showing interest in buying:
Shares including Saregama India, eClerx Services, Tata Communications, Power Grid, CET, Campus Activeware and NTPC saw strong buying interest from market participants as they scaled their fresh 52-week highs, indicating bullish sentiment.

Selling Pressure in Stocks:
Shares of Easy Trip Planners hit their 52-week low, signaling bearish sentiment on the counter.

Sentiment Meter Bear:
Overall, market breadth favored the bears as 2,305 stocks ended in the red, while 1,661 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)