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

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

NEW DELHI: Nifty continued its downward journey last week and formed a long bearish candle on the daily and weekly scales. Its BSE counterpart Sensex shed over 3,500 points in the past 6 sessions in the bear dominated pre-Budget week.

Manish Hathiramani, technical analyst at Deen Dayal Investments, said, “We could slide further to 13,400 and thereafter to 13,200. The fall has been backed by very high volumes, especially in the last hour of trade. Any rally up can now be utilised to short the Nifty for lower targets. The resistance is now at 14,000 and until that is not crossed, we will remain in the grip of the bears.”

Vinod Nair, Head of Research at Geojit Financial Services, said the weakening global trends has hugely impacted the cautious pre-Budget domestic market. The pace of recovery in the US and Europe has slowed down, having implications on Indian exports and FII inflows, he said.

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

Wall Street drops after J&J vaccine data
US stock indexes dropped, closing out the Friday session with the biggest weekly fall since October, as investors gauged the ramifications of Johnson & Johnson’s COVID-19 vaccine trial results, while a standoff between Wall Street hedge funds and small, retail investors added to volatility. The Dow Jones Industrial Average fell 2.03 per cent, the S&P 500 lost 1.93 per cent, and the Nasdaq Composite dropped 2 per cent on Friday.

European stocks post worst week since Oct
European stocks slid on Friday, recording their worst weekly performance since October as concerns around the slow rollout of COVID-19 vaccines mount, while a retail trading frenzy led to volatility on Wall Street. Concerns around the potential economic damage from a new strain of the coronavirus in Europe and delays to vaccine rollouts have dented sentiment in the past few days. The benchmark STOXX 600 index closed 1.9 per cent lower, Germany’s DAX fell 1.7 per cent and the UK’s blue-chip FTSE 100 dropped 1.8 per cent.

Tech View: Nifty50 forms long bearish candle
A long bearish candle on the daily chart on Friday dashed hope of any recovery and made analysts set a near-term target as low as 13,200 for the index. Nifty has decisively closed below its 50-day simple average, said Mazhar Mohammad of Chartviewindia.in. Meanwhile, a long negative candle was formed on the weekly chart after a gap of four months.

Check out the candlestick formations in the latest trading sessions


F&O: Surge in VIX, lower lows for fifth session send out weak signals
India VIX moved up 4.33 per cent from 24.29 to 25.34 levels. A surge in volatility due to selling pressure and ahead of the Budget 2021 could keep the market volatile with limited upside. Since, it is the beginning of new series, options data lay scattered at different strike prices. On the options front, maximum Put open interest stood at 14,000 level followed by 13,000, while maximum Call OI was seen at 15,000 followed by 14,500 levels. Options data suggested a wider trading range between 13,200 and 14,000/14,200 levels ahead of the Budget.

Stocks showing bullish bias
Momentum indicator Moving Average Convergence Divergence (MACD) on Friday showed bullish trade setup on the counters of Cummins India, KRBL, KEC International, Mahindra Holidays, Punjab Chemicals and Crop Protection, TCI, Jindal Poly Films, TeamLease Service, Rossell India, Prime Securities, I G Petrochemicals and JSW Holdings.

Stocks signalling weakness ahead
The MACD showed bearish signs on the counters of Reliance Industries, JSW Energy, Voltas, Tata Coffee, Apollo Hospitals, Schneider Electric, Bajaj Finserv, DCW, Sequent Scientific, IFB Industries, Jai Balaji Industries, MRF, Agarwal Industrial Corporation, TV Today Network, SML Isuzu, STEL Holdings, GOCL Corporation, D P Wires, D P Abhushan and Alicon Castalloy.

Friday’s most active stocks
RIL (Rs 3,775.85 crore), Tata Motors (Rs 3,748.05 crore), Shriram Transport Finance (Rs 2,298.55 crore), Maruti Suzuki (Rs 2,264.81 crore), Axis Bank (Rs 2,073.70 crore), Bajaj Finance (Rs 2,067.57 crore), HDFC Bank (Rs 1,992.38 crore), TVS Motor (Rs 1,956.60 crore), ICICI Bank (Rs 1,778.66 crore) and HDFC (Rs 1,773.10 crore) were among the most active stocks on Dalal Street on Friday in value terms.

Friday’s most active stocks in volume terms
Indian Railway Finance Corporation (Shares traded: 38.19 crore), Vodafone Idea (Shares traded: 28.97 crore), YES Bank (Shares traded: 18.31 crore), SAIL (Shares traded: 17.16 crore), Tata Motors (Shares traded: 13.84 crore), PNB (Shares traded: 12.56 crore), Indian Oil Corp (Shares traded: 7.42 crore), Bank of Baroda (Shares traded: 7.28 crore), Federal Bank (Shares traded: 5.28 crore) and BHEL (Shares traded: 5.22 crore) were among the most traded stocks in the session.

Stocks showing buying interest
Solara Active Pharma, TVS Motor, Suzlon Energy, Cummins India and Jyothy Labs witnessed strong buying interest from market participants as they scaled their fresh 52-week highs on Friday, signalling bullish sentiment.

Stocks seeing selling pressure
Indian Railway Finance Corporation, Jump Networks and Niraj Cement Structurals witnessed strong selling pressure in Friday’s session and hit their 52-week lows, signalling bearish sentiment on these counters.

Sentiment meter favours bears
Overall, market breadth remained in favour of bears. As many as 179 stocks on the BSE 500 index settled the day in green, while 319 settled the day in red.

Podcast: How should you position yourself for Budget Day?>>>

While conservative traders tend to stay light on Budget Days to steer clear of knee-jerk reactions, the adventurous ones are gearing up to ride the storm. We discuss trading strategies for the Budget Day and more in today’s special podcast with independent market expert Rajiv Nagpal.

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