NEW DELHI: Inflation, along with rising geopolitical tensions, is the biggest headwind for the market at this juncture. Traders will keep an eye on how the US Fed negotiates this necessary devil.
Here’s how analysts read the market pulse:
“Nifty witnessed a recovery during the day, as it found support around 80 per cent retracement of the previous rally from 16,400 to 18,350. The lower shadow on the daily chart indicated buying at the lower levels. Going forward, the resistance at 17,400 may challenge the bulls; however, a decisive move above that level may take the Nifty higher towards 17,800. On the lower end support is visible at 17,000 and 16,800 levels,” said Rupak De, Senior Technical Analyst at LKP Securities.
“One can expect a sideways consolidation move in the 17,600-16,800 range. The trend for Thursday can be influenced by factors like F&O monthly expiry and outcome of Federal Reserve meet. Hence, it looks prudent to remain neutral for the day and if Nifty50 sustains above 16,832 on Thursday, long positions can be considered for a target of 17,600 level, whereas a close below 16,800 can pave the way for a test of 16,410 level,” said Mazhar Mohammad of Chartviewindia.in.
That said, here’s a look at what some of the key indicators are suggesting for Thursday’s action:
Wall Street rebounds ahead of Fed meet
US stocks rebounded in initial trading Wednesday ahead of a Federal Reserve policy update, while ongoing tension between Russia and Ukraine helped pushed oil to a seven-year high. The Dow Jones Industrial Average rose 1.31 per cent shortly after the market open. The S&P 500 jumped 1.77 per cent and the Nasdaq Composite climbed 2.24 per cent, after dropping over 2 per cent on Tuesday.
The Fed is due to update its policy plan at 2 p.m. EST (1900 GMT) after a two-day meeting. A first-rate increase is seen in March, and three more quarter-point increases are expected by year-end.
European shares extend recovery
European shares extended gains on Wednesday and were on track for their best session since early December, as investors braced for any hints of faster monetary policy tightening from the U.S. Federal Reserve in the face of surging inflation. The pan-European STOXX 600 rose 2 per cent, extending gains to a second session after losing about 4 per cent on Monday.
Tech View: Buying at low
Nifty50 on Tuesday tested the sub-16,850 level before staging a strong rebound. In the process, the index formed a bullish candle on the daily chart with a long lower wick, suggesting the emergence of buying at low. The sentiment has turned marginally positive but the index needs to defend the 16,800 level to avoid resumption of selling, analysts said..
F&O: Volatility likely
After a bounce on Tuesday, punters were seen accumulating Call options for near-the-money strike prices, which is a bearish signal. Open interest for Put contacts saw reduction. F&O expiry is scheduled on Thursday, which will lead to volatility.
Stocks showing bullish bias
Momentum indicator Moving Average Convergence Divergence (MACD) showed bullish trade setup on the counters of Axis Bank and Bayer Cropscience.
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 Jindal Stainless, Tata Power, Alok Industries, Chambal Fertilisers, JSW Energy and Shriram City Union. A bearish crossover on the MACD on these counters indicated that they have just begun their downward journey.
Most active stocks in value terms
Axis Bank (Rs 2811 crore), Reliance Industries (Rs 2651 crore), Maruti Suzuki (Rs 1808 crore), Bajaj Finance (Rs 1741 crore), Infosys (Rs 1571 crore), ICICI Bank (Rs 1558 crore) and TCS (Rs 1253 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: 39 crore), Suzlon Energy (Shares traded: 15 crore), YES Bank (Shares traded: 10 crore), Bank of Baroda (Shares traded: 7 crore), PNB (Shares traded: 5 crore) and Alok Industries (Shares traded: 5 crore) were among the most traded stocks in the session.
Stocks showing buying interest
Sharda Cropchem, ABB Power, Maruti Suzuki, Bharat Dynamics, Power Grid and ABB India witnessed strong buying interest from market participants as they scaled their fresh 52-week highs, signaling bullish sentiment.
Stocks seeing selling pressure
IndiaMart Intermesh, Dhani Services, Sanofi India, HDFC AMC, AstraZeneca, Jyothy Labs and Mahanagar Gas witnessed strong selling pressure and hit their 52-week lows, signaling bearish sentiment on the counter.
Sentiment meter favours bulls
Overall, market breadth was in favour of gainers as 1,979 stocks ended in the green, while 1,366 names settled with cuts.
Podcast: Is the worst behind for Dalal Street?
Benchmark indices snapped their five-day losing streak and staged a strong recovery from lower levels, ending the day higher. Investors bought the dip and accumulated stocks at lower levels. However, weaker global sentiments capped the gains during Tuesday’s session. Traders were cautious ahead of the Fed’s policy outcome and monthly expiry of derivatives. Banking and auto stocks saw heavy demand, whereas IT players remained under pressure. The BSE barometer Sensex gyrated in a wide range of 1,550 points but gained about 370 points at the end and finished the session above 57,850. Its broader peer, Nifty50, added about 130 points and settled at a couple of points below 17,280.