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

NEW DELHI: The consolidation in the market may continue moving forward and volatility is likely to reign supreme on Monday as well. The market will first react to increased restriction in some states and more liberal vaccination rules proposed by India.

Here’s how analysts read the market pulse:-

Motlial Oswal’s Chandan Taparia said the bullish candle on weekly scale has a long lower shadow, indicating buying was seen at declines but hurdles are intact at higher levels. For him, a Nifty50 hold above 17,000 is a must for an upmove towards 17,200 and 17,350. Taparia sees support at 16,900.

Gaurav Ratnaparkhi, Head of Technical Research at Sharekhan, said the testing of the hourly upper Bollinger Band and the 20-DMA attracted a fresh round of selling. The index, he said, formed a bearish Outside Bar along with an Engulfing bear candle on the daily chart on Friday. He felt Friday’s high of 17,155 has became a crucial resistance.

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

S&P 500 hits record close
Wall Street’s main indexes posted solid gains for a third straight session on Thursday, with the S&P 500 marking a record-high close, as encouraging developments gave investors more ease about the economic impact of the Omicron coronavirus variant.

European stocks close lower
European shares closed lower in light holiday trading on Friday, following a recent rally in global shares on signs the Omicron coronavirus variant may not derail global economic recovery. The pan-European STOXX 600 index slipped 0.1% to 483.01 in a shortened trading session ahead of Christmas. The benchmark has added 1.9% this week.

Tech View: Another Doji on charts
Nifty50 on Friday formed a bearish candle on the daily chart, a day after forming an indecisive Doji, suggesting negative bias in the market. On the weekly chart, the index formed a bullish candle. Analysts believe the index may stay in a consolidation phase going ahead.

F&O: No clear winner
In the derivatives segment, 17,200 has seen accumulation of calls, meaning traders see it as the biggest resistance and the first hurdle if the market has to move further higher. For bears, 16,500 has seen a lot of Put accumulation, meaning support is available at this price.

Stocks showing bullish bias
Momentum indicator Moving Average Convergence Divergence (MACD) showed bullish trade setup on the counters of Torrent Pharma, Mindteck, Capacit’e Infraprojects, APL Apollo Tubes and La Opala.

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 signalling weakness ahead
The MACD showed bearish signs on the counters of Torrent Pharma, India Cements, DB Realty, Reliance Industries, Exide Industries, Allcargo Logistics and Manappuram Finance. Bearish crossover on the MACD on these counters indicated that they have just begun their downward journey.

Most active stocks in value terms
HCL Tech (Rs 2,022 crore), Reliance Industries (Rs 859 crore), TCS (Rs 812 crore), Tata Motors (Rs 721 crore), Infosys (Rs 705 crore) and ICICI Bank (Rs 639 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.

Most active stocks in volume terms
Vodafone Idea (Shares traded: 25 crore), YES Bank (Shares traded: 8 crore), Suzlon Energy (Shares traded: 8 crore), PNB (Shares traded: 6 crore), Vakrangee (Shares traded: 4 crore) and L&T Finance Holdings (Shares traded: 3 crore) were among the most traded stocks in the session.

Stocks showing buying interest
KPIT Tech, Tech Mahindra, Anupam Rasayan, JSW Energy, Radico Khaitan and Max Healthcare witnessed strong buying interest from market participants as they scaled their fresh 52-week highs, signaling bullish sentiment.

Stocks seeing selling pressure
Indigo Paints witnessed strong selling pressure and hit its 52-week lows, signaling bearish sentiment on the counter.

Sentiment meter favours bulls
Overall, market breadth was in favour of losers as 1,573 stocks ended in the green, while 1,751 names settled with cuts.

Podcast: How Omicron may impact the unlock trade in stock market

Already under pressure from FII selling, the rapid spread of the Omicron variant of Covid-19 is now casting a shadow of uncertainty on Nifty’s outlook in the next few months. In today’s special podcast with independent market expert Rajiv Nagpal, lets understand the threats and opportunities.

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