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Ahead of Market: 12 things that will decide stock action on Friday

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By Sabari Saran

NEW DELHI: Asian markets extended losses on Thursday, perpetuating the weak sentiment from the US tech rout. But mild gains in US stock at the opening tick later in the day held out promise for Friday’s session on Dalal Street, which was shut on Thursday for a public holiday.

Nifty slipped 1 per cent on Wednesday, and in the process, formed a Bearish Belt Hold pattern on the daily chart. Analysts said the 50-pack is facing a stiff hurdle on the higher side, especially in the 14,900-15,000 zone.

“Only a close above the 15,000 mark can activate the overall bullish stream. Otherwise, we may again see selling pressure at higher levels. Support can be seen near the 14,775-14,700 zone,” said Rohit Singre, Senior Technical Analyst at LKP Securities.

VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said globally the markets are caught between two opposing forces: economic recovery and inflation fears. “While the former is positive, the latter is negative. The market trend, going forward, will depend on which of the two triumphs over the other,” he said.

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

US Stocks gain led by tech stocks

Wall Street’s main indices opened higher on Thursday, with the tech-heavy Nasdaq in the lead after data showed fewer Americans filed for weekly jobless claims, while investors shrugged off a surge in producer prices. Dow rose 37.08 points, or 0.11 per cent, at the open, while the S&P 500 opened higher by 11.95 points, or 0.29 per cent, and the Nasdaq by 119.26 points, or 0.92 per cent.

Inflation fears roil European markets

European stocks slid in Thursday’s trade, as a rapid rise in US inflation spooked investors, while a drop in commodity prices weighed on heavyweight miners. The pan-European STOXX 600 index fell 1.6 per cent initially, but later recovered to trade flat. European stocks have rallied to all-time highs this month, with the STOXX 600 up almost 10 per cent so far this year as economic recovery prospects and strong earnings drew buyers of equities.

Nifty may find support at 14,620

Nifty on Wednesday fell below the 14,700 level, and in the process breached a few crucial supports, including the 50-day moving average. The index ended up forming a Bearish Belt Hold pattern, which suggested bear domination over the bulls. Analysts said the next support for the index lies in the 14,620-14,600 range. They continue to see resistance for the index in the 15,000-15,050 zone. Aditya Agarwala of YES Securities said the 20-DMA for the index now lies at 14,620 level. It will be critical to watch out for support in the 14,650-14,600 zone and see whether the bulls are able to push the index back above 14,800 level.

Check out the candlestick formations in the latest trading sessions

CandlesticksETMarkets.com

Rising India VIX sends out weak signals

India VIX moved up 1.26 per cent from 19.83 to 20.08 level. The fear gauge needs to hold below the 20 mark to again attract a bullish stance in the market. On the options front, maximum Put Open Interest stood at 14,000 level followed by 13,500, while maximum Call OI was seen at 15,000 level followed by 14,800. There was Call writing at strike prices 14,800 and 15,200 while Put unwinding was seen at all the immediate strike prices with Put writing at strike price 14,700. Options data suggested a wider trading range between 14,400 and 15,000 levels.

Stocks showing bullish bias

Momentum indicator Moving Average Convergence Divergence (MACD) on Wednesday showed bullish trade setup on the counters of Indian Overseas, Bank of Maharashtra, Godrej Industries, Avanti Feeds, Century Textiles, Shalimar Paints, Vertoz Advertising, Vascon Engineers, Astral, Oriental Trimex, Swan Energy, AIA Engineering,

, Gulf Oil Lubricants, Somany Ceramics, , Balaxi Pharmaceutica and VST Industries, among others.

The MACD is known for signalling 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 the security may see an upward movement and vice versa.

Stocks signalling weakness ahead

The MACD showed bearish signs on the counters of Jindal Steel & Power, Adani Ports & SEZ, Ambuja Cements, Indus Towers, Graphite India, Adani Total Gas, Intellect Design, Manali Petrochem,

, Guj. Alkalies & Chemicals, Heritage Foods, Finolex Industries, IFGL Refractories, Natco Pharma, Jagsonpal Pharma, Vidhi Specialty Food, Tata Elxsi, Kalyani Steel, Saregama India, among other. Bearish crossovers on the MACD chart on these counters indicated that they have just begun their downward journey.

Wednesday’s most active stocks in value terms

Tata Steel (Rs 3,745.47 crore), Tata Motors (Rs 3,641.69 crore), BHEL (Rs 2,551.02 crore), Godrej Consumer (Rs 2,368.65 crore), SBI (Rs 1,967.43 crore), Cadila Healthcare (Rs 1,939.05 crore), NMDC (Rs 1,344.78 crore), SAIL (Rs 1,306.38 crore), PNB (Rs 1,284.56 crore) and RIL (Rs 1,164.83 crore) were among the most active stocks on Dalal Street on Wednesday in value terms.

Wednesday’s most active stocks in volume terms

Vodafone Idea (Shares traded: 39.79 crore), BHEL (Shares traded: 34.75 crore), PNB (Shares traded: 34.59 crore), Reliance Power (Shares traded: 29.26 crore), JP Power (Shares traded: 19.36 crore), YES Bank (Shares traded: 15.97 crore), Bank of Baroda (Shares traded: 12.85 crore), Tata Motors (Shares traded: 11.16 crore), South Indian Bank (Shares traded: 9.72 crore) and SAIL (Shares traded: 9.57 crore) were among the most traded stocks in the session.

Stocks showing buying interest

Godrej Consumer, Chambal Fertilisers, Godrej Industries, KIOCL and Alkyl Amines witnessed strong buying interest from market participants, as they scaled their fresh 52-week highs on Wednesday, signalling bullish sentiment.

Stocks seeing selling pressure

Akg Exim, Chaman Lal Setia Exports, Globe Textiles (India), Suvidhaa Infoserve,

RE and Jump Networks witnessed strong selling pressure and hit 52-week lows, signalling bearish sentiment on these counters.

Sentiment meter favours the bears

Overall, the market breadth remained in favour of the bears. As many as 191 stocks on the BSE 500 index settled the day in the green, while 307 settled the day in the red.

Podcast: Themes to bet on in next few months
While signs of a spike in US inflation continued to roil stock markets around the world, including in India, investors are asking how big a risk do they face in the Indian market from the price rise in the US. How real is the threat of a possible interest rate hike by the US Fed? And which themes should one look at now, giving the uncertainty that lies ahead?