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

NEW DELHI: Benchmark indices were under high selling pressure on Friday as the US reported inflation numbers which were the highest in 40 years. This has raised concerns over more frequent interest rate hikes by the US Federal Bank. Analysts said that domestic inflation numbers and global geopolitical tensions will steer the markets in the coming week, along with the FOMC minutes of meeting.

Here’s how analysts read the market pulse:-

Chandan Taparia of Motilal Oswal Securities said that a bearish candle on the daily scale with long lower shadow and a small-bodied bearish candle on weekly scale indicate tug of war between the bulls and the bears. Taparia said it is important for Nifty50 to hold above 17,350 for an up move towards 17,500 and 17,777 levels. He sees support for the index at 17,250 and 17,100 levels.

“Nifty50 has given up almost all the gains of the last two trading sessions. In this process, it also filled the bullish gap placed in the zone of 17,339-306 level. Hence, going forward, it needs to sustain above 17,300 levels to retain positive bias. A close below 17,300 level can drag down the index towards 17,000 level,” said Mazhar Mohammad, Chief Strategist – Technical Research, Chartviewindia.in.

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

US stocks close sharply lower

US stocks closed sharply lower Friday as heightened concern that Russia may soon invade Ukraine sent oil prices spiking and investors to dump risky assets like equities. All three major stock benchmarks saw a weekly decline, halting a two-week advance. The tech-laden Nasdaq Composite suffered the biggest drop. The Dow Jones Industrial Average DJIA dropped 503.53 points, or 1.4%, to close at 34,738.06. The S&P 500 SPX fell 85.44 points, or 1.9%, to end at 4,418.64. The Nasdaq Composite COMP fell 394.49 points, or 2.8%, to finish at 13,791.15.

US inflation, hawkish Fed driver European stocks lower

European stocks fell on Friday after a hotter-than-expected US inflation print and hawkish remarks from a Federal Reserve official prompted expectations of more aggressive interest rate hikes. U.S. inflation came in at an annual 7.5% in January, fresh data revealed on Thursday, far ahead of expectations and marking the highest year-on-year rise in consumer prices since 1982. The pan-European Stoxx 600 closed down 0.6%, with tech shares shedding 2.2% to lead the losses as most sectors and major bourses slipped into negative territory.

Tech View: Bullish candle
Nifty50 on Friday snapped a three-day winning run and formed a bearish candle on the daily charts with no upper wick, suggesting selling at the word go. The index fell below its 20-day and 50-day moving averages at open and stayed below them all through the day, suggesting weakness.

F&O: Breakout awaited
Ruchit Jain, Lead Research, 5paisa.com said that on a broader time frame chart, this is seen as a time-wise correction where we could see buying interest on declines and selling pressure at higher levels. “The support end of the mentioned ‘Triangle’ pattern would be seen around 17130-17150 while 17570-17600 would be seen as resistance. For the coming week, we expect Nifty to trade within this range and only a breakout on either side would lead to the next directional move,” he added.

Stocks showing bullish bias

Momentum indicator Moving Average Convergence Divergence (MACD) showed bullish trade setup on the counters of Schneider Electrical, RHI Magnesita India, Usha Martin, Man Infra, L&T Technology, Wockhardt, Tata Steel Long Products, HDFC AMC, ICICI Securities and AstraZeneca Pharma.

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 Reliance Power, Punjab National Bank, SBI, Ashok Leyland, SJVN, Apollo Tyres, AU Small Finance Bank, Magnum Ventures, Inox Leisure and Borosil Renewables. Bearish crossover on the MACD on these counters indicated that they have just begun their downward journey.

Most active stocks in value terms

Reliance Industries (Rs 1,742 crore), TCS (Rs 1,426.45 crore), Infosys (Rs 1,299 crore), Tata Steel (Rs 1,212 crore), Divis Labs (Rs 1,121 crore), ICICI Bank (Rs 1,042 crore) and HDFC (Rs 987 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: 14.50 crore), YES Bank (Shares traded: 10.51 crore), PNB (Shares traded: 3.87 crore), Suzlon Energy (Shares traded: 3.63 crore), Tata Power (Shares traded: 3.60 crore), Alok Industries (Shares traded: 3.41 crore) and Bank of Baroda (Shares traded: 3.37 crore) were among the most traded stocks in the session.

Stocks showing buying interest

Orient Refractories, Hindalco, GNFC, Adani Transmission and Adani Gas witnessed strong buying interest from market participants as they scaled their fresh 52-week highs, signaling bullish sentiment.

Stocks seeing selling pressure

Solara Active Pharma, Zydus Wellness, Sequent Scientific, Essel Propack, Kansai Nerolac, MRF and IOL Chemicals witnessed strong selling pressure and hit their 52-week lows, signaling bearish sentiment on the counter.

Sentiment meter favours bears

Overall, market breadth was in favour of losers as 876 stocks ended in the green, while 2,438 names settled with cuts.

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