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

Nifty traded in a consolidated range of about 100 points and formed a small bearish candle on the daily chart. The candle looked like a ‘Hanging Man’ pattern, suggesting exhaustion in the ongoing positive momentum. Analysts said, Nifty will need to scale the 15,800 level to ensure the positive momentum continues. Will the tiring bulls take a breather now or will the rally continue?

Here’s how analysts read the market pulse:

Ruchit Jain of Angel Broking said a move above 15,800 would lead to a resumption of momentum in the index towards 16,000. “The index may find support around 15,670 and 15,600 levels with resistance in the range of 15,770-15,800,” he said.

Gaurav Ratnaparkhi of Sharekhan said, the index seems to be taking a pit stop after a strong rally in the last three weeks. “The day’s low of 15,680 becomes crucial support. If that is breached, Nifty50 can slide down to fill up a gap of 15,597-15,611,” he said.

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

Wall Street turns cautious ahead of inflation data; tech stocks boost Nasdaq

Apple was the top boost to the Nasdaq on Tuesday after a report said it was in talks with battery suppliers over its electric vehicle, while the S&P 500 and the Dow Jones indices were muted as investors awaited key inflation data this week. The Dow Jones Industrial Average declined 28.13 points, or 0.08 per cent, to 34,602.11. The S&P 500 rose 6.25 points, or 0.15 per cent, to 4,232.77, and the tech stocks-heavy Nasdaq Composite barometer jumped 95.89 points, or 0.69 per cent, to 13,977.61.

European shares log mild gains

European stocks inched higher, lifted by utilities and telecom shares, although weak German industrial output data and doubts over the United Kingdom lifting restrictions later this month capped gains. The pan-European STOXX 600 index rose 0.2 per cent – holding below all-time highs – with sectors considered more stable such as utilities, real estate and telecoms leading the gains. Data showed German industrial output fell unexpectedly in April, in a further sign that semiconductor shortages and other supply bottlenecks are hampering the recovery in Europe’s largest economy.

F&O: Major Put writing at 15,700 & 15,600 levels shows fatigue in Nifty
The 50-scrip index has to hold above the 15,700 level to witness a bounce towards a fresh lifetime high of 15,900, while on the downside support exists at 15,600 and 15,550 levels.

India VIX fell 2.22% from 15.56 to 15.25 on Tuesday. The fear gauge is near its lowest levels of last 17 months since February 2020 and a falling VIX can extend the bullish market momentum towards a new high territory.

Tech View: Nifty50 seeing loss of momentum; needs to breach 15,800 level for further upside
A move above 15,800 is a must for Nifty50 to keep the positive momentum alive, say analysts. They suggest the 15,680-15,600 zone as the immediate support range for the index. “It would be practical to suspect that Nifty50 may be in a distribution phase and a close below 15,600 level can trigger a sharp downswing with initial targets placed in the 15,459-375 zone. If the bulls push the index beyond 15,778 level, then strength may expand into the 15,850-929 zone,” said Mazhar Mohammad of Chartviewindia.in.

Check out the candlestick formations in the latest trading sessions

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Stocks showing bullish bias

Momentum indicator Moving Average Convergence Divergence (MACD) showed bullish trade setup on the counters of IDBI Bank, Himadri Speciality, MMTC, ITC, Greaves Cotton, Morepen Labs, Rain Industries, Rana Sugars, Balrampur Chini, Praj Industries, Strides Pharma, Cipla, BF Utilities, Rallis India, Man Industries, Bhageria Industries, Olectra Greentech, Uttam Sugar Mills, Zensar Technologies, Hindustan Unilever, Dalmia Bharat Sugar, Navin Fluorine, Sakthi Sugars, JBM Auto, KCP, Quick Heal Technology, Trejhara Solutions, Umang Dairies, Zuari Agro Chemicals, BF Investment, Vardhman Polytex, GSS Infotech, Vadilal Industries, Vardhman Textiles, Dynacons Systems, Dharani Sugars, Jubilant Industries, Manugraph India, Atul, Precision Wires, ABM International, Punjab Chemicals, Gujarat Apollo Industries and Bannari Amman.

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 Bank of Baroda, Tata Motors, Alok Industries, Indian Bank, Jammu & Kashmir Bank, Bajaj Finance, Thirumalai Chemicals, OnMobile Global, Rico Auto Industries, Arvind Fashions, Chennai Petrochem, Fineotex Chemical, Avanti Feeds, Pidilite Industries,CCL Products India, Walchandnagar, Goodluck India, Websol Energy System, Apex Frozen Foods, STL Global, RSWM, Ramco Systems, Godrej Agrovet, Nestle India, Sicagen India, Smartlink Holdings, Times Guaranty, GlaxoSmithKline Pharma, TVS Srichakra, Shiva Texyarn and Greenlam Industries. Bearish crossover on the MACD on these counters indicated that they have just begun their downward journey.

Tuesday’s most active stocks in value terms

Adani Power (Rs 3,232.37 crore), Adani Enterprises (Rs 2,026.69 crore), Tata Motors (Rs 1,526.69 crore), Adani Ports SEZ (Rs 1,438.73 crore), IRCTC (Rs 1,399.97 crore), SBI (Rs 1,330.02 crore), Piramal Enterprises (Rs 1,279.59 crore), Tata Steel (Rs 1,202.60 crore), Tata Power (Rs 1,089.59 crore) and Laurus Labs (Rs 1,053.85 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 highest trading turnovers in the day.

Tuesday’s most active stocks in volume terms

Vodafone Idea (Shares traded: 31.09 crore), YES Bank (Shares traded: 28.31 crore), Adani Power (Shares traded: 22.14 crore), GTL Infra (Shares traded: 11.25 crore), PNB (Shares traded: 10.50 crore), Tata Power (Shares traded: 9.30 crore), IOB (Shares traded: 9.15 crore), Reliance Power (Shares traded: 9.03 crore), HFCL (Shares traded: 6.84 crore) and BHEL (Shares traded: 6.44 crore) were among the most traded stocks in the session.

Stocks showing buying interest

Adani Power, Piramal Enterprises, Sun Pharma Advanced Research, Birlasoft and Century Textiles witnessed strong buying interest from market participants as they scaled their fresh 52-week highs, signalling bullish sentiment.

Stocks seeing selling pressure
Anmol India and DSJ Communications witnessed strong selling pressure and hit their 52-week lows, signalling bearish sentiment on these counters.

Sentiment meter favours bulls
Overall, the market breadth remained in favour of the bulls. As many as 261 stocks on the BSE500 index settled the day in the green, while 234 settled the day in the red.

Podcast: Are Dalal Street bulls fatigued now? >>>

Tuesday’s session saw rangebound trade. We asked our expert whether Dalal Street bulls are exhausted now? The IPO season is inching closer after a pause. Which sectors should investors focus on in the primary market?