Ahead of Market: 10 things that will decide stock action on Monday

Indian equities unfazed by weak global cues ended in the green in Friday’s session. Nifty ended at 19,820, up around 100 points, while Sensex added 333 points to settle the week at 66,599. Global distress weighed on IT and pharma stocks which came under selling pressure. Nevertheless, the gains in infra, industrial, and capital goods stocks together with the continued buying in mid- and small-cap stocks contributed to the ongoing rally.

Here’s how analysts read the market pulse:
“Despite a mixed global trend marked by weak cues, Indian equities remained resilient, supported by the strong economic outlook. Global concerns were sparked by a surge in crude oil prices, August’s US jobless claims data, weak Chinese service PMI and trade figures, and rising gas prices due to strikes in Australia. However, in the broad market, mid- and small-cap stocks attracted strong buying interest, even though their valuations were relatively high. Moreover, heightened order inflows made sectors like infrastructure and realty particularly attractive to investors during the week. Currently, the market is eagerly awaiting data on inflation and industrial production to provide further guidance,” Vinod Nair, Head of Research at Geojit Financial Services, said.

“On the hourly chart, we can observe that Nifty has reached the upper end of the rising channel and hence a consolidation is likely in the upcoming week. The range of consolidation is likely to be 19850 – 19670. On the upside, we expect 19900 which is around the swing high it touched during July. In terms of levels, 19630 – 19670 shall act as a crucial support zone while 19860 – 19900 shall act as an immediate hurdle zone,” Jatin Gedia, Sharekhan by BNP Paribas, said.

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

US market closes flat
The S&P 500 closed slightly higher on Friday but well below its session high and all three of Wall Street’s major averages posted weekly declines as investors worried about interest rates and waited anxiously for upcoming US inflation readings. The Dow Jones Industrial Average rose 75.86 points, or 0.22%, to 34,576.59, the S&P 500 gained 6.35 points, or 0.14%, to 4,457.49 and the Nasdaq Composite added 12.69 points, or 0.09%, to 13,761.53.

European shares log weekly losses
European stocks logged weekly losses despite gaining on Friday, as investors fretted over a worsening outlook for the economy and the trajectory of U.S. interest rates, while the focus shifts to central bank action next week. The pan-European STOXX 600 index (.STOXX) added 0.2%, snapping a seven-day losing streak, but declined 0.8% for the week. Luxury heavyweight LVMH (LVMH.PA) added 2.2%, its first gain in eight sessions, lifting the personal and household goods sector (.SXQP) 1.1% higher.

Tech View: Bullish candle
A reasonable bull candle was formed on the daily chart, which indicates high volatility in the market at the highs. The market has started to surpass one after another hurdles recently and is expected to move above the current resistance of 19865 levels.Stocks showing bullish bias
Momentum indicator Moving Average Convergence Divergence (MACD) showed bullish trade on the counters of Power Finance Corporation, Indian Overseas Bank, RIL, Hi-Tech Pipes and Heritage Foods among others.

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 the security may see an upward movement and vice versa.

Stocks signaling weakness ahead
The MACD showed bearish signs on the counters of MRPL, GMR Airports Infra, Indiabulls Housing Finance, BLS International Services and Kalyan Jewellers among others. Bearish crossover on the MACD on these counters indicated that they have just begun their downward journey.

Most active stocks in value terms
MRF (Rs 109022 crore), Page Industries (Rs 42178 crore), Honeywell Automation (Rs 39018 crore), 3M India (Rs 32611 crore), and Shree Cements (Rs 25868 crore) among others 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
Vodafone Idea (Shares traded: 33.81 crore), JP Power (Shares traded: 31.38 crores), IRFC (Shares traded: 17.92 crores), Reliance Power (Shares traded: 16.66 crore), and YES Bank (Shares traded: 15.37 crore) among others were among the most traded stocks in the session on NSE.

Stocks showing buying interest
Shares of Bombay Burmah, PFC, ISGEC Heavy Engineering, REC and Graphite India among others witnessed strong buying interest from market participants as they scaled their fresh 52-week highs, signaling bullish sentiment.

Stocks seeing selling pressure
Shares of Penta Gold, SKS Textiles, Milton Industries and Ambani Organics among others stocks that hit their 52-week lows, signaling bearish sentiment on the counters.

Sentiment meter favours bulls
Overall, market breadth favoured bulls as 1983 stocks ended in the green, while 1,711 names settled in the red.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

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