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

NEW DELHI: Nifty50 on Wednesday formed a 'Dark Cloud Cover' candle on the daily chart, signaling initial signs of reversal. Analysts said the index may witness selling if it falls below the crucial support range of 16,500-15,450. Indian markets were closed on Thursday on account of Muharram.

Here's how analysts read the market pulse:-
Mazhar Mohammad of Chartviewindia.in said the index is showing an initial sign of reversal. "This bearish pattern will be confirmed if Nifty50 witnesses a follow-through selling on Friday below the 16,535 level," he said.

Ashis Biswas, Head of Technical Research at CapitalVia Global Research, said the market is seeing early signs of reversal with deviation occurring in Nifty50, Nifty Midcap and Nifty Smallcap indices. He advised traders to refrain from building new positions until the market breadth improves.

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

Wall Street opens lower on taper fears, commodity losses
US stocks opened lower on Thursday on concerns the Federal Reserve could begin to rein in its massive monetary stimulus, while commodity-linked stocks sank as oil and metal prices tumbled to multi-month lows. The Dow Jones Industrial Average fell 86.02 points, or 0.25%, at the open to 34,874.67.
The S&P 500 opened lower by 17.83 points, or 0.41%, at 4,382.44. The Nasdaq Composite dropped 102.75 points, or 0.71%, to 14,423.16 at the opening bell.

European shares fall 2% on taper fears
European shares fell almost 2% on Thursday as fears built that tapering in global monetary policy would happen sooner than previously expected, while a slump in commodity prices dragged mining stocks lower. The pan-European STOXX 600 was down 1.9% at a two-week low, with mining stocks sliding 4.6% on track for their worst day in in more than year. Although the European Central Bank has held steady, rising inflation has prompted some policymakers to say it must begin to rein in its easy money policies that have been instrumental in lifting the STOXX 600 to record highs.

Tech View: Nifty forms 'Dark Cloud Cover' candle
Nifty50 on Wednesday snapped its seven-day winning streak as traders turned nervous, pushing the NSE barometer past 15,700 for the first time ever. The 50-pack index ended up forming a 'Dark Cloud Cover' candle on the daily chart, signaling initial signs of reversal. Analysts said the index has managed to hold above its immediate support range of 16,500-15,450 and any fall below this range could attract selling pressure.

F&O: Falling VIX a healthy sign
India VIX fell down by 3.77 per cent from 13.41 to 12.90 levels. Fall in volatility, even after profit booking declines, indicates that dips could be bought again in the market. The options data suggested a broader trading range between 16,300 and 17,000 zones, while an immediate trading range was seen between 16,400 and 16,750 zones.

Stocks showing bullish bias
Momentum indicator Moving Average Convergence Divergence (MACD) showed bullish trade setup on the counters of United Breweries, Rana Sugars, Jubilant Foodworks, Container Corporation, Kabra Extrusion, V-Guard India, Aarti Industries, Varun Beverages, Saksoft, Suven Life Sciences, Dr. Reddy's Labs, Bajaj Finserv, Aegis Logistics, MPS, Palred Technologies, Creative Peripherals, Symphony, DCM Shriram, TCPL Packaging, Power Mech Projects, Mold-Tek Packaging, Akzo Nobel India, Esab India and Atul.

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 Vedanta, IndusInd Bank, L&T, NIIT, Radico Khaitan, Deepak Nitrite, KEI Industries, JHS Svendgaard Labor, Carborundum, Oracle Financial, Manaksia Steels, HEG, Rossari Biotech, Bharat Gears, Cineline India, Macpower CNC Machine, SMS Lifesciences and Lakshmi Finance. Bearish crossover on the MACD on these counters indicated that they have just begun their downward journey.

Most active stocks in value terms
Tata Steel (Rs 1852.39 crore), HDFC Bank (Rs 1767.99 crore), Apollo Hospital (Rs 1419.30 crore), Bajaj Finance (Rs 1410.42 crore), United Spirits (Rs 1259.86 crore), Infosys (Rs 1162.96 crore), Vedanta (Rs 1096.78 crore), Jubilant Food (Rs 1029.83 crore), RIL (Rs 1009.14 crore) and MindTree (Rs 992.04 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: 45.96 crore), YES Bank (Shares traded: 10.07 crore), JP Power (Shares traded: 9.75 crore), Suzlon Energy (Shares traded: 5.91 crore), BHEL (Shares traded: 4.82 crore), Vedanta (Shares traded: 3.68 crore), Canara Bank (Shares traded: 3.45 crore), IDFC First Bank (Shares traded: 3.35 crore), PNB (Shares traded: 3.24 crore) and Reliance Power (Shares traded: 3.20 crore) were among the most traded stocks in the session.

Stocks showing buying interest
United Spirits, Aster DM Health, MindTree, Kajaria Ceramic and Jubilant Food witnessed strong buying interest from market participants as they scaled their fresh 52-week highs on Wednesday signalling bullish sentiment.

Stocks seeing selling pressure
Bombay Burmah, Aurobindo Pharma and YES Bank witnessed strong selling pressure and hit their 52-week lows, signalling bearish sentiment on these counters.

Sentiment meter favours bears
Overall, the market breadth remained in favour of the bears. As many as 191 stocks on the BSE500 index settled the day in the green, while 301 settled the day in the red.

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