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

Indian equity indices closed flat on Monday, as gains in energy and metals stocks, lower tax windfall on crude and a fall in the US dollar, respectively, were offset by profit booking in financials.

The NSE Nifty 50 index rose 0.13% to 24,572 and the S&P BSE Sensex fell 0.02% to 80,424.

Here’s how analysts pulse the market:

“On the daily chart we can observe that the Nifty is consolidating around the 24620 – 24650 zone which coincides with the 61.82% Fibonacci retracement level and the upper end of the gap area formed on 5th August. We believe that the Nifty is in the process of filling the gap area. , 24650 – 24700 is the immediate resistance zone while 24390 – 24350 is the immediate support zone, we expect a range-bound movement in the range of 24800 – 24200. Word Perspective,” Sherkhan’s Jatin Gedia.

Tejas Shah of JM Financial & BlinkX said, “The technical framework of Nifty is relatively stronger than that of Bank Nifty. The Nifty index also closed above the critical resistance zone of 24,350-400 for two consecutive days, which is a positive sign. Nifty is now trading between 24,500 and 24,350. At -24,400 level, on the upside, immediate resistance for Nifty is at 24,700 mark and next resistance is at 24,850 level.”

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

US Market:

US stocks were flat on Monday, with the S&P 500 up 0.2%, the Dow Jones up 0.3% and the Nasdaq up 0.1%. Ulta Beauty rose 2.5% following Berkshire Hathaway’s stake announcement, while AMD gained 0.4% on its ZT Systems acquisition.

Trading was quiet with Treasury yields holding steady ahead of Federal Reserve Chair Jerome Powell’s upcoming speech in Jackson Hole, where rates are expected to be cut next month.
Tech View: Small Red Candle The Nifty ended Monday’s range-bound session 31.5 points higher to form a small red candle on the daily chart indicating hesitation after Friday’s upside breakout.

The short term trend of Nifty has been consistently positive. After placing at key overhead resistance around 24700, some further consolidation or minor decline is likely in the next 1-2 sessions, before showing another round of upside breakout. Nagaraj Shetty of HDFC Securities said immediate support will be seen at 24400 level.

Stocks Showing Bullish Bias:

Momentum indicator Moving Average Convergence Divergence (MACD) showed bullish trade on counters of Info Edge, Ethos, Glenmark Pharma, Cholamandalam Financial Holdings and GRP Ltd.

MACD is known for indicating the opposite trend in traded securities or indices. When the 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 Pfizer, AIA Engineering, Dhanuka Agritech, Bajaj Steel Industries and NDR Auto Components. A bearish crossover on MACD on these counters indicates that they have started their downward journey.

Most active stocks by value:

Triveni Engineering & Industries (Rs 2,164 crore), RIL (Rs 2,056 crore), HDFC Bank (Rs 1,587 crore), Hindustan Zinc (Rs 1,305 crore), CDSL (Rs 1,275 crore), Trent (Rs 1,220 crore), and First Source (Rs. 1,220 crore) Rs. 1,204 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: 26.5 crore), Yes Bank (shares traded: 13.1 crore), Suzlon Energy (shares traded: 9.6 crore), Zomato (shares traded: 8 crore), Tata Steel (shares traded: 6.2 crore), NBCC (Shares traded: 5.6 crore), and Ujjivan Small Finance Bank (Shares traded: 4 crore) among others were among the most traded stocks of the session on NSE.

Stocks showing buying interest:

Shares of Caplin Point, Godfrey Phillips, Triveni Engineering, Firstsource, Jubilant Pharmava, Himadri Specialty and Voltas saw strong buying interest from market participants as they scaled their fresh 52-week highs, indicating bullish sentiment.

Selling Pressure in Stocks:

No major stocks touched their 52-week lows on Monday.

The sentiment meter favors the bulls:

Overall, market breadth favored the bulls as 2,715 stocks ended in the green, while 1,325 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)