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

MUMBAI: After crossing the 18,000 points mark for the first time ever, the Nifty50 index was unable to sustain those gains. The index formed a bullish candle with a long wick as it faced selling pressure in the late session.

Here’s how analysts read the market pulse:

Gaurav Ratnaparkhi, Head of Technical Research, Sharekhan by BNP Paribas said that if Nifty50 manages to cross the level of 18,000 on a closing basis, the consolidation will be considered to have broken on the upside and the Nifty50 will then be set for a significant upside.

Mazhar Mohammad of Chartviewindia.in said, it looks critical for Nifty to sustain above 17,839-level to prevent near-term weakness. “Sustaining above the 17,839 level can push the index towards 18,100 -200. A fall below the same should induce further profit booking on an intraday basis,” he said.

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

Wall Street rises as Big Tech

US stock indexes rose on Monday as growth and financial stocks gained, shrugging off inflation worries in the run-up to third-quarter earnings reports from later this week. At 11:56 a.m. ET, the Dow Jones Industrial Average was up 171.61 points, or 0.49 per cent, at 34,917.86, the S&P 500 was up 18.57 points, or 0.42 per cent, at 4,409.91 and the Nasdaq Composite was up 72.05 points, or 0.49 per cent, at 14,651.59.

FTSE 100 gains on oil, mining stock boost

UK’s FTSE 100 climbed on Monday, helped by heavyweight mining and energy stocks, while a stronger pound on the back of rising inflation and interest rate hike bets limited further gains. The blue-chip FTSE 100 index ended 0.7 per cent higher and recorded its third consecutive session of rises, while, the broader STOXX Europe 600 closed flat.

Tech View: Consolidation likely

Analysts said that the Nifty50 index will need to close above the 18,000-mark on Tuesday to confirm the resumption of the uptrend. A failure to cross the 18,000-hurdle could force the index to consolidate around the 17,900-18,000 points range in the coming sessions.

F&O: Upside seen limited

The selling in out-of-money call options of the Nifty50 beyond the 18,200 strike price suggested that traders do not anticipate quick gains in the market going ahead. Traders also sold the 17,800 and 17,900 strike price put options of the index indicating that both levels will act as near-term support.

Stocks showing bullish bias

Momentum indicator Moving Average Convergence Divergence (MACD) showed bullish trade setup on the counters of Exide Industries, Vedanta, Tata Steel, Sical Logistics and Bharat Forge.

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 GAIL India, Himadri Specialty, Fortis Health, Oil India, Thirumalai Chemicals, Kansai Nerolac, Dr Reddy’s and Allcargo Logistics. A bearish crossover on the MACD on these counters indicated that they have just begun their downward journey.

Most active stocks in value terms

Tata Motors (Rs 4661 crore), TCS (Rs 4386 crore), IEX (Rs 3153 crore), IRCTC (Rs 2907 crore), Tata Power (Rs 2381 crore), RIL (Rs 1828 crore), Infosys (Rs 1502 crore), HDFC Bank (Rs. 1067), SBI (Rs. 967) and Sterling Wilson Solar (Rs 885 crore) were among the most active stocks on Dalal Street in value terms. Higher activity on a counter in value terms can help identify the counters with the highest trading turnovers in the day.

Most active stocks in volume terms

Vodafone Idea (Shares traded: 31.4 crore), Tata Power (Shares traded: 12.63 crore), Tata Motors (Shares traded: 11.3 crore), Suzlon Energy (Shares traded: 8.7 crore), BHEL (Shares traded: 8.0 crore), GMR Infra (Shares traded: 7.8 crore) and Bank of Baroda (Shares traded: 7.4 crore) were among the most traded stocks in the session.

Stocks showing buying interest: IEX, SCI, KIOCL, GMR Infra, Tata Motors, Route Mobile and Tata Power witnessed strong buying interest from market participants as they scaled their fresh 52-week highs, signaling bullish sentiment.

Stocks seeing selling pressure

Jiya Eco Products, Jainam Ferro Alloys and Coastal Corp witnessed strong selling pressure and hit their 52-week lows, signaling bearish sentiment on these counters.

Sentiment meter favours bears

Overall, the market breadth remained in favour of the bulls. As many as 293 stocks on the BSE500 index settled the day in the green, while 207 ended the day in the red.

Podcast: Will mid & smallcaps outperform going ahead?

BSE Sensex, which gyrated in the range of 665 points, gave up its most of the early gains to settle at 60,135, just 77 points higher. Nifty50 scaled 18,000 for the first time. It pared most of the day’s gains to close just 5-odd points below 17,950. Broader markets outperformed as BSE midcap and BSE smallcap indices settled with gains of more than half a per cent each. Can we see midcap and smallcap pockets outperforming in the coming months?