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

Domestic equity indices closed higher on Tuesday, as investors bought back a six-session losing streak, while better-than-expected results for the BJP in state assembly elections in Haryana also supported market sentiment.

Investors now await the Reserve Bank of India’s policy decision on Wednesday, where the central bank is widely expected to keep interest rates on hold, though some expect a shift to a neutral stance.

The Nifty 50 index closed up 0.88% at 25,013, while the S&P BSE Sensex gained 0.72% at 81,634. Both indices were down around 0.1% at the start of the session.

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

“The Nifty formed a bullish Harami pattern on the daily time frame, indicating rising optimism. Further, the index has moved above the crucial moving average on the hourly time frame. The RSI has formed a bullish crossover in the shorter time frame, further supporting the positive. Outlook In the near term, The index may move towards the 25,350-25,400 range, and a break below this level could lead to weakness.”

Asit C. Hrishikesh Yedve of Mehta Investment Intermediates said, “Technically, on the daily chart, the index forms an insider bar candlestick near the short-term trend line support and previous demand zone. Thus, as long as the index remains above the lows. 24,690, 25,150- 25,350 levels are possible Investors should adopt “buy on dips” strategy in Nifty index for short term.

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

US Market:

Wall Street’s major indexes gained ground on Tuesday as investors focused on the upcoming third-quarter earnings season and inflation data, which could provide insight into the Federal Reserve’s rate cut plans.

Indices bounced back after a rough Monday, when all three major indexes fell about 1%, weighed down by rising Treasury yields, rising tensions in the Middle East and a reassessment of US rate expectations.

Most S&P 500 sectors posted gains, with the information technology index leading the way with a gain of 1.8%.

In contrast, the index tracking energy stocks struggled, falling 2.8% and on pace for its worst day since April 30, as oil prices pulled back following Monday’s rally.

European Stocks:

European stocks closed lower on Tuesday as a lack of new information on China’s stimulus measures led to a sell-off in the world’s second-largest economy, particularly in sectors linked to mining and luxury goods.

The pan-European STOXX 600 index fell nearly 1% to a two-week low before recovering slightly, ending down 0.55%. Luxury brands such as LVMH, Kering, Burberry and Hermes, which rely heavily on Chinese revenue, saw declines ranging from 0.6% to 4.5%.

Miners experienced the biggest declines in European sectors, which fell 4.4% as copper and iron ore prices fell after Chinese officials failed to inspire confidence in their economic revival plan.

Tech View: Long bull candle

A long bull candle was formed on the daily chart, indicating that the market is on the verge of showing an uptrend. It was seen that the Nifty is in the process of forming a double bottom type pattern around the 24,700 level, which needs to be confirmed with further upside. The index closed below its 50-DEMA, though showing a good recovery.

Tuesday’s upmove could be a motivating factor for the Bulls’ comeback. A more sustained upside from here could confirm a near-term bottom reversal pattern. A decisive move above the 25,000 level could open the next upside resistance at 25,400-25,500 in the near term. Nagaraj Shetty of HDFC Securities said the immediate support is 24,700.

In open interest (OI) data, the highest OI on the call side was seen at 25,000 and 25,200 strike prices, while on the put side, the highest OI was seen at 25,000 strike price followed by 24,800.

Stocks Showing Bullish Bias:

Momentum indicator Moving Average Convergence Divergence (MACD) showed bullish trade on counters of Sky Gold, Aptus Value Housing Finance and DB Corp .

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 JSW Holdings, BSE, Info Edge, Maruti Suzuki, Britannia Industries, Blue Star and HEG. A bearish crossover on MACD on these counters indicates that they have started their downward journey.

Most active stocks by value:

BSE (Rs 2,875 crore), Paytm (Rs 2,537 crore), HDFC Bank (Rs 2,446 crore), RIL (Rs 2,356 crore), Tata Motors (Rs 1,926 crore), M&M (Rs 1,898 crore), and Zomato (Rs 1,892 crore) were among the other 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:

JP Power (Shares Traded: 14.1 Crore), Suzlon Energy (Shares Traded: 13.5 Crore), Yes Bank (Shares Traded: 9.2 Crore), Tata Steel (Shares Traded: 7.5 Crore), Zomato (Shares Traded: 6.9 Crore), Shri. Renuka Sugars (shares traded: 4.4 crore), and IRFC (shares traded: 4.3 crore) among others were among the most traded stocks of the session on NSE.

Stocks showing interest in buying:

Shares of BSE, Trent, Dixon Technologies, Ipca Labs, Dr Lal PathLabs and Coforge saw strong buying interest from market participants as they scaled their fresh 52-week highs, indicating bullish sentiment.

Selling Pressure in Stocks:

Shares of Zee Entertainment, Equitas Small Finance Bank and RBL Bank touched their 52-week lows, signaling bearish sentiment on the counter.

Sentiment Meter Bulls:

Overall, market breadth favored the bulls as 3,024 stocks ended in the green, while 923 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)