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

Nifty breached the crucial 13,000 barrier and traded above the mark for almost the entire session before ending 128.70 points or 1.0 per cent higher at 13,055.15 on Tuesday, forming a bullish candle, suggesting that bulls tightened their grip on the market. Nifty has gained 12 per cent so far this month.

With this, Nifty finally gave a consolidation breakout after six trading sessions, said Chandan Taparia of Motilal Oswal Securities.

The headline index climbed to its lifetime high as FIIs rained cash on Dalal Street as the foreign inflow breached the highest level on a monthly basis for the calendar year with no signs of these floodgates being shut in the near term. These upbeat sentiments were further bolstered by strong global cues on the raising hopes of a successful Covid-19 vaccine.

"Going ahead, 13,100 is the immediate hurdle to watch out for. Beyond that, the index can march towards 13,350. A fall below 12,960, which was earlier acting as a resistance, will now act as a support as per the principle of role reversal," said Gaurav Ratnaparkhi, Senior Technical Analyst at Sharekhan.

Vinod Nair, Head of Research, Geojit Financial Services, said, “Market is inching higher with more confidence that Covid-19 vaccine will be available in India soon. It can provide an advantage to India compared to the rest of the world. Foreign inflows are already on a new high on a monthly basis due to risk on strategy on healthier emerging markets like India. Recently, the broader market, including mid and smallcaps, have started to perform better, which may continue in the short term as largecaps look expensive post the solid rally from the Covid low."

That said, here’s a look at what some of the key indicators are suggesting for Wednesday's action:
US shares jump on Biden transition
Wall Street traded higher on Tuesday as the formal go-ahead for President-elect Joe Biden's transition to the White House ended weeks of political uncertainty, while Tesla surged 3.3% to cross $500 billion in market capitalization for the first time. At 0900 IST, the Dow Jones Industrial Average was up 373.84 points, or 1.26%, to 29,964.95. The S&P 500 was up 32.98 points, or 0.92%, at 3,610.57, while the Nasdaq Composite was up 16.88 points, or 0.14%, to 11,922.82.

European shares rise on possible easing of virus curbs
European shares held near eight-month highs on Tuesday as a possible easing of lockdowns in France added to a brighter mood from encouraging developments related to coronavirus vaccines. The pan-European STOXX 600 index was up 0.8% at 0900 IST, supported by strong gains in the travel sector and oil & gas stocks after crude prices hit their highest levels since late March.

Tech view: Nifty bulls eyeing 13,350 level now
Nifty50 on Tuesday broke above the crucial resistance of 13,000-mark with ease. The index formed a bullish candle on the daily chart. Analysts said the bulls seem to be in no mood to give in. They believe the index could flirt with the 13,350 level in the coming days. “The hourly Bollinger Bands that had become flat, have started expanding, in line with the fresh up move. Going ahead, 13,100 is the immediate hurdle to watch out for. Beyond that, the index can march towards 13,350," said Gaurav Ratnaparkhi, Senior Technical Analyst at Sharekhan.

Check out the candlestick formations in the latest trading sessions

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F&O: Volatility needs to be low for momentum to continue
Fear gauge India VIX rose 1.20 per cent from 20.79 to 21.05 levels. Volatility needs to remain low for the momentum to continue at a higher market base. On the options front, maximum Put open interest stood at 12,800 level followed by 13,000, while maximum Call OI was seen at 13,500 followed by 13,000 levels. There was Call unwinding at all immediate strike prices while Put writing was seen at 13,000 and then 12,900 levels. Options data suggested a higher trading range between 12,850 and 13,250 levels.

Stocks showing bullish bias
Momentum indicator Moving Average Convergence Divergence (MACD) on Tuesday showed bullish trade setup on the counters of Wipro, CG Power and Industries, Nava Bharat Ventures, Tata Consultancy, Lupin, Laurus Labs, Hindustan Unilever, Dr. Reddy's Labs, Magma Fincorp, Gujarat Narmada Valley Fertilisers & Chemicals, Solar Industries, Torrent Power, OnMobile Global, Vivimed Labs, TV Today Network, Prime Securities, Kitex Garments, Tata Communications, Solara Active Pharma, Dalmia Bharat Sugar, Bayer Cropscience, Anik Industries, Dhanuka Agritech, Maan Aluminium, Poly Medicure, CMI Ltd, Bharat Rasayan, Sirca Paints India, Pearl Global Industries and Pilani Investment.

Stocks signalling weakness ahead
The MACD showed bearish signs on the counters of Axis Bank, Ashok Leyland, TVS Motor, City Union Bank, Pricol, Gulshan Polyols, Shoppers Stop, Mahindra Logistics, Cineline India, Deccan Cements, Salasar Techno Engineering, Butterfly Gandhimathi Appliances, Vardhman Acrylics, Saregama India, Career Point and Esab India.

Tuesday's most active stocks
HDFC Bank (Rs 2871.04 crore), RIL (Rs 2787.00 crore), Bajaj Finance (Rs 2065.48 crore), Axis Bank (Rs 1884.08 crore), Kotak Bank (Rs 1724.34 crore), IndusInd Bank (Rs 1682.18 crore), Bajaj Finserv (Rs 1577.35 crore), Maruti Suzuki (Rs 1368.35 crore), M&M (Rs 1177.47 crore) and SBI (Rs 1152.35 crore) were among the most active stocks on Dalal Street on Tuesday in value terms.

Tuesday's most active stocks in volume terms
Vodafone Idea (Shares traded: 44.89 crore), YES Bank (Shares traded: 17.30 crore), BHEL (Shares traded: 7.54 crore), IDFC First Bank Ltd. (Shares traded: 4.83 crore), Tata Motors (Shares traded: 4.77 crore), SBI (Shares traded: 4.76 crore), ITC (Shares traded: 4.54 crore), GMR Infra (Shares traded: 3.93 crore), Federal Bank (Shares traded: 3.92 crore) and J&K Bank (Shares traded: 3.82 crore) were among the most traded stocks in the session.

Stocks showing buying interest
Granules India, Tanla Solutions, Adani Ports SEZ, Capri Global and Dalmia Bharat witnessed strong buying interest from market participants as they scaled their fresh 52-week highs on Tuesday signalling bullish sentiment.

Stocks seeing selling pressure
Lakshmi Vilas Bank; Jump Networks; Vishal Fabrics; D. P. Abhushan Ltd witnessed strong selling pressure in Tuesday’s session and hit their 52-week lows, signalling bearish sentiment on these counters.

Sentiment meter favours the bulls
Overall, market breadth remained in favour of bulls. As many as 312 stocks on the BSE 500 index settled the day in green, while 182 settled the day in red.

Podcast: Nifty @ 13k: Ominous signs investors should watch out for >>>
As the benchmark equity indices logged new all-time highs, investors on Dalal Street grew richer by Rs 1.35 lakh crore. Nifty closed above the psychologically-important 13,000-mark for the first time ever. With Nifty Bank gaining the most, all sectoral indices ended the day in green. We caught up with Vinod Nair, head of research at Geojit Financial Services to understand what strategy retail investors should adopt.