stock market analysis: Ahead of Market: 12 things that will decide stock action on Monday

NEW DELHI: Domestic equity markets ended another week on a poor note, dropping 1.5 per cent in the last session and an overall fall of 4 per cent during the week. Friday’s session wiped off about Rs 4 lakh crore from investors’ kitty.

Markets remain volatile in the near term, thanks to rising inflation and interest rate worries. Experts are suggesting investors to be cautious and remain light in the current market scenario.

Here’s how analysts read the market pulse: –

Mazhar Mohammad of said a bear candle on the weekly charts, the fourth week in a row is emphasizing the bear domination in the market.

“Nifty seems to have taken support of 16,350 level, before showing intraday consolidation. Normally, a formation of Doji after a reasonable weakness alert regarding trend reversal on the upside. The confirmation by the way of a sustainable close above 16,500 level could open an upside bounce in the market, “said Nagaraj Shetti at HDFC Securities.

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

US stocks: S&P 500, Nasdaq, Dow close in the negative

US stocks fell on Friday and ended the week lower as investors took in a key report on the state of the labor market’s recovery, which underscored still-solid labor market conditions. The S&P 500 dropped by 0.6% Friday to close at 4,123.67. The Nasdaq Composite dropped 1.4%, ending at 12,144.66. The Dow fell by just under 100 points to settle at 32,901.08. A day earlier, the S&P 500 shed 3.6%, while the Nasdaq dropped 5% for its worst day since June 2020. The Dow had lost more than 1,000 points.

European stock markets retreat
European markets retreated on Friday, tracking global bail after Wall Street posted its worst day since 2020. The pan-European Stoxx 600 fell 1.6% by the close, with retail stocks shedding 2% as almost all sectors and major stock exchanges finished in negative territory. Oil and gas stocks gained 0.7%. In the UK, FTSE 100 has dropped as fears over surging inflation and a looming economic slowdown grip global markets.

Tech View: Indecisive Doji candle formed
The Nifty50 on Friday saw a gap-down start but avoided further fall to eventually end up making an indecisive Doji candle on the daily chart. The index has been trading below its key moving averages now. Analysts said that while a small bounce can not be ruled out, the ongoing pain in the market is unlikely to ease in the near future.

R&D: Trend remains negative
The trend continues to remain negative and the ‘RSI’ oscillator on the daily chart is not yet into the oversold zone to attempt for a reversal, said Ruchit Jain, Lead – Research,

“The ’20 EMA ‘on the hourly chart has acted as a resistance in the last few sessions which is now placed around 16640 and is the hurdle to Nifty,” he added. “On the flipside, the bearish pattern has given a target projection of 16125 and thus 16200-16125 would be a range to watch out for.”

Stocks showing bullish bias

Momentum indicator Moving Average Convergence Divergence (MACD) showed bullish trade setup on the counters of Power Grid, ABB India, Gujarat Gas, Cosmo Films, SMC Global, Jet Airways, Supreme Industries and Silver Touch Technologies.

The MACD is known for signaling trend reversals in traded securities or indices. When the MACD crosses above the signal line, it gives a bullish signal, indicating that the price of security may see an upward movement and vice versa.

Stocks signaling weakness ahead

The MACD showed bearish signs on the counters of Indian Hotels, Apollo Tires, Bombay Dyeing, Hindustan Unilever, Karanatak Bank, Biocon and DCM Shriram. Bearish crossover on the MACD on these counters indicated that they have just begun their downward journey.

Most active stocks in value terms

Reliance Industries (Rs 2,375.22 crore), Bajaj Finance (Rs 1,854.56 crore), HDFC Bank (Rs 1,766.90 crore), Axis Bank (Rs 1,050.67 crore), Tata Motors (Rs 1,032.49 crore), Infosys (Rs 952.60 crore) and ITC ( Rs 913.82 crore) were among the most active stocks on NSE in value terms. Higher activity on a counter in value terms can help identify the counters with highest trading turnovers in the day.

Most active stocks in volume terms

ITC (Shares traded: 3.45 crore), Tata Motors (Shares traded: 2.51 crore), NTPC (Shares traded: 2.26 crore), ONGC (Shares traded: 1.68 crore), SBI (Shares traded: 1.67 crore), Axis Bank (Shares traded: 1.55 crore) and Coal India (Shares Traded: 1.42 crore) were among the most traded stocks in the session on NSE.

Stocks showing buying interest:

None of the stocks witnessed strong buying interest from market participants as no counter scaled its fresh 52-week highs, signaling bullish sentiment.

Stocks seeing selling pressure

Dilip Buildcon, Info Edge, Nazara Technologies, Hindustan Copper, Infibeam Avenues, Strides Shasun and PNB Housing Finance witnessed strong selling pressure and hit their 52-week lows, signaling bearish sentiment on the counters.

Sentiment meter favors bears
Overall, market breadth favored losers as 758 stocks ended in the green, while 2,615 names settled with cuts.



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