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


NEW DELHI: As Nifty ended marginally lower on Friday, it formed a bearish engulfing candle on the daily chart.

Nagaraj Shetti of HDFC Securities said Nifty may trade range bound with a negative bias in the short term. “There is a possibility that the rangebound movement may continue over the next 1-2 sessions. There is a higher possibility of a retest of recent swing highs at 11,600-11,620 levels before Nifty shows major weakness at the highs next week,” he said.

Vinod Nair of Geojit Financial Services said in the absence of fresh triggers, the current uncertainty is expected to continue. “Any news with regards to the border tensions with China, or global events can impact the markets on the downside. As such, investors need to be cautious and watch for news-specific movements,” he said.

Chandan Taparia of MOFSL said the index has to respect the immediate support at 11,450 level to witness an upmove towards the 11,600-11,650 zone, while on the downside, the next major support exists in the 11,350-11,333 zone.

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

US stocks lost more weight on Friday
Major US indices lost ground on Friday as the struggles for the tech sector continued. The Dow lost 245 points, making it roughly flat for the week. The S&P500 and Nasdaq Composite clinched weekly losses with Friday declines of 1.1% each. The decline in some technology stocks Friday could have been accelerated by the expiration of options on individual stocks and ETFs, which takes place at the market close.

European shares fall on Covid spike
European stocks closed lower on Friday as investors monitored a rise in coronavirus cases across the continent and the prospects of economic recovery. FTSE slipped 0.71 per cent, DAX 0.70 per cent and CAC40 1.22 per cent. The pan-European Stoxx600 ended 0.5% lower, with most sectors and major bourses in negative territory.

Tech View: Nifty chart shows rally losing steam
Nifty50 fell for the second straight session on Friday and barely held above the 11,500 level. The index formed a Bearish Belt Hold on the daily chart and an indecisive Doji-like candle on the weekly chart. Such formations after Nifty50 retraced 62 per cent of the fall from the highs of 11,794-11,185 hint that the recent rally is losing steam, said Mazhar Mohammad of Chartviewindia.in.

F&O: Options show Nifty range at 11,300-700
India VIX on Friday fell marginally by 0.27 per cent from 20.10 to 20.04 level. VIX needs to cool down below 20-18 zone to get the bulls have a grip to kick off the next leg of rally. Options data suggested a higher trading range between 11,300 and 11,700 levels.

Stocks showing bullish bias
Momentum indicator Moving Average Convergence Divergence (MACD) on Friday showed bullish trade setup on the counters of Cipla, Cadila Healthcare, M&M, Natco Pharma, Aurobindo Pharma, Suven Life Sciences, Hikal, Marksans Pharma, Ambuja Cements, Apollo Hospitals, Gujarat Gas, Piramal Enterprises, Gati, Apollo Micro Systems, Nectar Lifesciences, Centrum Capital, Hero MotoCorp, Geojit Financial, Mahanagar Gas, Nucleus Software, and Dhanuka Agritech, among others.

Stocks signalling weakness ahead

The MACD showed bearish signs on the counters of Infibeam Avenues, Adani Gas, LIC Housing, JM Financial, SpiceJet, Kalpataru Power, Balmer Lawrie, Tanla Solutions, GHCL, Mahindra Holidays, Schaeffler India, Vinyl Chemicals, Triveni Turbine, PPAP Automotive, Gulshan Polyols, Onelife Capital, Gallantt Metal, Lakshmi Machines, Honeywell Automation, MRO-TEK Realty, Salona Cotspin and Naga Dhunseri Group, among others.

Friday’s most active stocks

Dr Reddy’s Labs (Rs 11577.72 crore) , RIL (Rs 3517.76 crore) , ICICI Bank (Rs 2890.57 crore) , Cipla (Rs 2841.91 crore) , Bharti Airtel (Rs 2691.38 crore) , Lupin (Rs 1680.11 crore) , Sun Pharma (Rs 1352.06 crore) , Adani Green Energy (Rs 1339.16 crore) , Bajaj Finance (Rs 1305.75 crore) and Infosys (Rs 1297.98 crore) were among the most active stocks on Dalal Street on Friday in value terms.

Friday’s most active stocks in volume terms
Vodafone Idea (shares traded: 34.53 crore) , Ashok Leyland (shares traded: 7.86 crore) , ICICI Bank (shares traded: 7.81 crore) , YES Bank (shares traded: 6.38 crore) , SBI (shares traded: 5.53 crore) , Bharti Airtel (shares traded: 5.48 crore) , Tata Motors (shares traded: 4.63 crore) , NTPC (shares traded: 4.47 crore) , IDFC First Bank (shares traded: 3.83 crore) and Cipla (shares traded: 3.55 crore) were among the most traded stocks in the session.

Stocks seeing buying interest
Natco Pharma, Dr Reddy’s Labs, Cipla, Laurus Labs and Bayer Cropsciences witnessed strong buying interest from market participants as they scaled their fresh 52-week highs on Friday signalling bullish sentiment.

Stocks seeing selling pressure
Kuantum Papers and Vaishali Pharma witnessed strong selling pressure in Friday’s session and hit their 52-week lows, signalling bearish sentiment on these counters.

Sentiment meter favours the bears
Overall, market breadth remained in favour of bears. As many as 227 stocks on the BSE 500 index settled the day in green, while 270 settled the day in red.

Podcast: Which IPO should you invest in?>>
The action on Dalal Street seems to have shifted to IPOs and the broader markets with largecaps having taken a back seat. The primary market is set to see a lot of action with three issues and one listing slated for the week ahead. However, how to decide which IPOs to invest money in.


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