Ahead of Market: 10 things that will decide D-Street action on Tuesday

Equity benchmark Sensex snapped two-day losing streak to close 126 points higher on Monday, propped up by buying in index heavyweights Reliance Industries, Maruti and SBI amid a higher opening in European equities. However, investors remained cautious amid stress in the US and European financial systems, traders said. Nifty settled just shy of 17,000 levels, while the broader markets underperformed. Sector-wise, the realty index fell the most, while pharma index outperformed with gains of over 1%.

Here's how analysts read the market pulse:
“After a range-bound movement, the market ended mixed with marginal gains in large caps while mid- and small-caps had losses. Some certainty was seen in domestic banks and large caps due to ease in the US & European market aided by reports on the acquisition of SVB by US lender First Citizens Bank. However, the investors continue to remain cautious as stress in the US and European financial systems makes their central banks actions complex,” said Vinod Nair, Head of Research at Geojit Financial Services.

“The daily momentum indicator has a positive crossover and thus we shall continue to maintain our positive outlook on the index. On the upside, initial targets are placed at 17,200 and above that it can extend higher to 17,450 – 17,500. The crucial support zone is placed at 16,910 – 16,870,” said Jatin Gedia, Technical Research Analyst, Sharekhan by BNP Paribas.

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

US market
Wall Street's main indexes cut gains on Monday as investors assessed risks to the banking sector following a buyout deal for Silicon Valley Bank's assets, while a rise in Treasury yields pressured rate-sensitive technology and other growth stocks. At 11:45 a.m. ET, the Dow Jones Industrial Average was up 182.40 points, or 0.57%, at 32,419.93, the S&P 500 was up 8.08 points, or 0.20%, at 3,979.07, while the Nasdaq Composite was down 46.01 points, or 0.39%, at 11,777.95.

The KBW Regional Banking index was up 0.8% after erasing some gains, while the S&P 500 Banks index rose 2.5%.

Regional banks Western Alliance Bancorp and PacWest Bancorp were up 4.9% and 4.4%, respectively.

European shares
European stocks climbed on Monday, as a sense of calm returned to markets following a week of turbulence over concerns about banking sector stability after the collapse of Credit Suisse and 2 US mid-sized lenders.

The pan-European STOXX 600 index rose 1.1%, with investors drawing comfort from news that First Citizens BancShares Inc would acquire Silicon Valley Bank's deposits and loans.

European banks rose 1.4% after shedding 3.8% on Friday, when Deutsche Bank sparked a rout in the sector. Shares of that German lender were up 6.2% after tumbling 8.5% on Friday.

Tech View: Identical open-close candle
An identical open-close candle was formed on Monday with long-upper and -lower shadow as per daily time-frame chart. This market action indicates a formation of Doji type candle patterns. Normally, a formation of Doji after a reasonable decline calls for a reversal of a down trend. But, the market is moving within a broader range and the implication of Doji could be less in the near term.

Stocks showing bullish bias
Momentum indicator Moving Average Convergence Divergence (MACD) showed bullish trade on the counters of Vijaya Diagnostic, Navkar Corporation, IOL Chemicals, Glenmark Pharma and Varun Beverages, among others.

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 signaling weakness ahead
The MACD showed bearish signs on the counters of National Fertilizers, Zen Technologies, Chaman Lal Setia, Rites and Nahar Poly Films among others. Bearish crossover on the MACD on these counters indicated that they have just begun their downward journey.

Most active stocks in value terms
HDFC Bank (Rs 2,501 crore), RIL (Rs 1,451 crore), ICICI Bank (Rs 1,448 crore), Adani Green (Rs 1,309 crore), Axis Bank (Rs 886 crore) and Adani Enterprises (Rs 871 crore) were among the most active stocks on NSE 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
YES Bank (Shares traded: 13.15 crore), SJVN (Shares traded: 7.92 crore), Vodafone Idea (Shares traded: 7.35 crore), Bank of Baroda (Shares traded: 5.08 crore) and Zomato (Shares traded: 4.96 crore) were among the most traded stocks in the session on NSE.

Stocks showing buying interest
Shares of AIA Engineering, Godrej Consumer, Cyient and Usha Martin, among others, witnessed strong buying interest from market participants as they scaled their fresh 52-week highs, signaling bullish sentiment.

Stocks seeing selling pressure
Shares of Aditya Birla Sun Life AMC, Trident, Tanla Solutions, Jubilant Ingrevia and Piramal Pharma, among others, hit their 52-week lows, signaling bearish sentiment on the counters.

Sentiment meter favours bears
Overall, market breadth favoured bears as 881 stocks ended in the green, while 2,771 names settled with cuts.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)