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

NEW DELHI: As Nifty recovered most of its previous session’s losses on Friday it formed a bullish candle on the daily chart. Manish Hathiramani of Deen Dayal Investments said while the markets spent some time above the psychological level of 11,000, the weakness in the index continues.

“The resistance on the upside is at 11,300. Until that is not crossed, we cannot surmise that the short term bear trend has been completed and an upside rally will ensue. On the downside, the Nifty can fall to achieve the 10750 level,” he said.

Vinod Nair of Geojit Financial Services said in spite of the rally, the market is expected to remain volatile and directionless in the absence of solid triggers.

“Global cues will continue to be in focus as a resurgence in virus cases around the world leads to more restrictions and more pressure on the economic recovery,” he said.

Sanjeev Zarbade of Kotak Securities said the key events to be watched out in the near future would be the Covid-19 trajectory in India and abroad, progress on vaccine front and global market cues.

“Stimulus measures, if any, in the US could provide support to the markets. If the market corrects from these levels, then investors should actively look for accumulating good quality stocks for long term wealth creation,” he said.

Nagaraj Shetti of HDFC Securities said any upside bounce up to 11,350-11,400 could be a sell on rise opportunity in the market and the expected decline from the highs could retest the lower 10,800 levels in the near term.

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

US stocks:
Tech stocks lifted the main indices more than 1%, but the Dow and the S&P 500 still posted their longest weekly losing streaks in a year as fears of a slowing economy sparked an almost month-long rout. The Dow Jones Industrial Average rose 358.52 points, or 1.34%, to 27,173.96 while the S&P 500 gained 51.87 points, or 1.60%, to 3,298.46.

European shares:
European stocks recorded their worst weekly decline since mid-June on Friday, as investors feared that a second wave of coronavirus infections will hamper economic recovery, while banking stocks sank to an all-time low.

Tech View:
Nifty has failed twice to break above the double top resistance point of 11,430, which brings the major pattern resistance zone down to 11,400-11,430 range from the earlier 11,800 levels. A technical pullback might continue but the zone of 11,400-11,450 will continue to pose resistance to Nifty at higher levels.

Since it is the beginning of new series, options data lay scattered at various strike prices. Maximum Put open interest stood at 10,500 level followed by 10,000, while maximum Call OI was at 11,500 followed by 12,000. There was marginal Call writing at strike prices 11,300 and 11,600 and Put writing at 10,500 and 10,600. Options data suggested a wider trading range between 10,500 and 11,500 levels, while an immediate range has shifted to the 10,800-11,300 zone.

Stocks showing bullish bias:
Momentum indicator Moving Average Convergence Divergence (MACD) on Friday showed bullish trade setup on the counters of Bhansali Engg, Indraprastha, Colgate Palmolive, Balkrishna Industries, KRBL, Thangamayil Jeweller, Huhtamaki PPL, Majesco, Vaishali Pharma, Mahindra CIE Auto, Wheels India and Transwarranty Finance among others.

Stocks signalling weakness ahead:
The MACD showed bearish signs on the counters of Lupin , Firstsource Solution, L&T Technology Services, Kopran, Gujarat Pipavav Port, Kajaria Ceramics, Skipper, Symphony, Visa Steel, V Mart Retail, KDDL and Bedmutha Industries among others.

Friday’s most active stocks:
RIL (Rs 2867.53 crore), TCS (Rs 1984.77 crore), Bajaj Finance (Rs 1933.87 crore), Dr. Reddy’s Labs (Rs 1792.92 crore), HCL Tech (Rs 1628.32 crore), Bharti Airtel (Rs 1466.39 crore), Infosys (Rs 1328.55 crore), ZEEL (Rs 1185.13 crore) , HDFC Bank (Rs 1054.66 crore) and Cipla (Rs 1016.38 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: 50.42 crore) , YES Bank (shares traded: 11.28 crore), Ashok Leyland (shares traded: 10.83 crore), Tata Motors (shares traded: 6.50 crore), ZEEL (shares traded: 6.16 crore), Indiabulls Housing Finance (shares traded: 6.08 crore), BHEL (shares traded: 5.79 crore), GMR Infra (shares traded: 5.14 crore), IDFC First Bank (shares traded: 4.66 crore) and SBI (shares traded: 4.65 crore) were among the most traded stocks in the session.

Stocks seeing buying interest:
IndiaMART InterMESH, Coforge, Ruchi Soya Industries, Hathway Cable and Granules India witnessed strong buying interest from market participants as they scaled their fresh 52-week highs on Friday signalling bullish sentiment.

Stocks seeing selling pressure:
Coal India, Delta Manufacturing, Future Lifestyle Fashions, Mittal Life Style and Kuantum Papers witnessed strong selling pressure in Friday’s session and hit their 52-week lows, signalling bearish sentiment on these counters.

Sentiment meter favours bulls:
Overall, market breadth remained in favour of bulls. As many as 436 stocks on the BSE 500 index settled the day in green, while 61 settled the day in red.

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