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

Indian benchmark equity indices closed higher after a sluggish start on Tuesday, led by gains in IT and pharma stocks ahead of key US inflation data that could signal a possible interest rate cut.

The Nifty 50 was up 0.42% at 25,041, while the S&P BSE Sensex was up 0.44% at 81,921.

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

“Nifty remained volatile throughout the day, unable to sustain above 25100. RSI remained in a bearish crossover in the daily timeframe, indicating continued weakness. Sentiment is expected to remain bearish in the near term unless Nifty manages above 25100. On the downside, support Seen at 24900, if a breach occurs, the index may fall further towards 24750,” said Rupak De of LKP Securities.

Sharekhan’s Jatin Gedia said, “On the daily chart we can observe that the Nifty has seen a recovery from the support cluster of 24800 – 24850. On the upside it has now reached the zone of 25100 – 25150 where resistance is seen in the form. 61.82% Fibonacci A retracement level is placed.

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

US Market:

US stocks faced challenges in extending gains, and crude prices fell on worries about weakening global demand ahead of Wednesday’s key inflation data.

Investors awaited the Labor Department’s Consumer Price Index (CPI) report and the first debate between Vice President Kamala Harris and former President Donald Trump, who are in a tight race for the White House.

Chinese data showing an increase in exports, anticipates possible tariffs from trading partners, including the incoming US administration. While megacap tech stocks led the Nasdaq into positive territory, the S&P 500 posted modest gains and the Dow lagged behind. Shares of major banks were under pressure following the Federal Reserve Bank’s new revisions to its capital plan.

Tech View: Small positive candle

Nifty formed a small positive candlestick with small upper and lower shadows. Technically, this pattern indicates the formation of a doji type of candlestick pattern, which is not classical. Generally, such a doji pattern on a hurdle signals caution for bulls.

“The short term trend of Nifty seems to have reversed and Nifty is currently at critical resistance at 25200 level. A decisive move above this hurdle could lead to new all-time highs. Immediate support is at 24900,” said Nagaraj Shetty of HDFC Securities.

In open interest (OI) data, the highest OI on the call side was seen at 25,100 and 25,200 strike prices, while on the put side, the highest OI was seen at 25,000 strike price followed by 24,900.

Stocks Showing Bullish Bias:

Momentum indicator Moving Average Convergence Divergence (MACD) showed bullish trade on counters of TVS Holdings, PI Industries, Hawkins Cookers, RBM Infracon, Himadri Specialty Chemicals, Tata Communications, Dodla Dairy and GM Breweries.

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 Craftsman Automation, Swaraj Engines, Shriram Finance, SBI Life Insurance, CET, Muthoot Finance and Motilal Oswal Financial Services. A bearish crossover on MACD on these counters indicates that they have started their downward journey.

Most active stocks by value:

Paytm (Rs 2,366 crore), HDFC Bank (Rs 2,192 crore), Jio Financial Services (Rs 2,146 crore), ICICI Bank (Rs 1,921 crore), Zomato (Rs 1,823 crore), Tata Power (Rs 1,739 crore), and RIL (Rs. 1,739 crore) Rs. 1,576 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: 44.4 crore), Suzlon Energy (shares traded: 14.4 crore), Yes Bank (shares traded: 7.3 crore), Zomato (shares traded: 6.8 crore), Jio Financial Services (shares traded: 6 crore), Prism Johnson (shares traded: 4.5 crore), and Tata Steel (shares traded: 4.1 crore) were the other most traded stocks in the session on NSE.

Stocks showing interest in buying:

Shares including Prism Johnson, Sumitomo Chemical, Aether Industries, Glenmark Life, Piramal Pharma, Himadri Specialty and Century Textiles 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 Tuesday.

The sentiment meter favors the bulls:

Overall, market breadth favored the bulls as 2,532 stocks ended in the green, while 1,426 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)