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

Weak sentiment ensuing the Fed’s commentary cast a pall of gloom over benchmark equity indices, which in tune with world markets ended sharply lower. Nifty ended at 18,400 levels, dropping over 1% with all the Nifty sectoral indices ending in the red, Nifty IT Index was the worst performer.

Here's how analysts read the market pulse:

“After the formation of indecision type of candle pattern like doji on Wednesday, Nifty witnessed sharp weakness on Thursday and closed the day lower by 245 points. After opening with a weak note, the market continued its downside momentum for the early- to mid-part of the session. The weakness intensified in the later part and Nifty closed near the lows,” Nagaraj Shetti, Technical Research Analyst, HDFC Securities, said.

“With the minor degree bounce in the last couple of sessions, the Nifty had retraced 61.8% retracement of the previous decline. The index formed a distribution near the key Fibonacci level throughout the day on December 14. Structurally, the index is moving down towards the lower end of the short-term consolidation range i.e. 18,300. Buying support can be expected again near 18,300. Overall, the short-term consolidation range of 18,300-18,700 remains intact,” Gaurav Ratnaparkhi, Head of Technical Research, Sharekhan by BNP Paribas, said.

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

US stocks
Wall Street's main stock indexes slid more than 1% on Thursday, as the Federal Reserve's guidance to stick to protracted policy tightening quelled hopes of the rate-hike cycle ending anytime soon.

The US central bank hiked rates by 50 basis points (bps) on Wednesday, slowing down from four back-to-back 75 bps hikes, although Fed Chair Jerome Powell said recent signs of weakening inflation have not brought any confidence yet that the fight had been won.

At 9:38 a.m. ET, the Dow Jones Industrial Average was down 441.84 points, or 1.30%, at 33,524.51, the S&P 500 was down 60.47 points, or 1.51%, at 3,934.85, and the Nasdaq Composite was down 201.52 points, or 1.80%, at 10,969.36.

All the 11 major S&P 500 sectors were in the red, with communication services and technology stocks falling more than 2% and bearing the brunt of selling pressure.mpaign=cppst


European shares
European shares slumped on Thursday, as risk sentiment waned ahead of an interest rate decision from the bloc's central bank, after the U.S. Federal Reserve's hawkish comments on rate hikes rattled global markets.

The region-wide STOXX 600 was down 1.2% at 0915 a.m. GMT, and appeared set for its worst day since late September, following a dismal trading session on Wall Street overnight after the Fed signalled more rate hikes to come.

Among STOXX 600 sectors, energy was the biggest loser, down 1.9%, tracking crude prices lower, while the retail sector declined 1.8%.

Tech View: Long bear candle
Nifty formed a long bear candle on the daily chart on Thursday, following a small upside bounce of a few sessions. Technically, this pattern indicates a sharp downward reversal in the market after the formation of lower top on Wednesday at 18,696 levels. This is not a good sign and indicates more weakness in the short term.

Stocks showing bullish bias
Momentum indicator Moving Average Convergence Divergence (MACD) showed bullish trade setup on the counters of Indiabulls Housing, HUDCO, Mahindra CIE, Indian Bank and TVS Motor 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 Union Bank of India, Tata Steel, GMR Airports, Dish TV and NLC India, 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 1,508 crore), PNB (Rs 1,392 crore), Yes Bank (Rs 1276 crore ) UCO Bank (Rs 1,227 crore) and RIL (Rs 1,039 crore) were among the most active stocks on the 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: 56.8 crore), Suzlon Energy (Shares traded: 47.62 crore), UCO Bank (Shares traded: 34.61 crore), and IOB (Shares traded: 28.49 crore) were among the most traded stocks in the session on NSE.

Stocks showing buying interest
Shares of UCO Bank, GIC, IOB, IDBI Bank and RCF, 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 Metropolis Health, Aarti Industries, Aurobindo Pharma and Keystone Realtors hit their 52-week lows on Tuesday, which signals bearish sentiment on the counter.


Sentiment meter favours bears
Overall, market breadth favoured bulls as 1,325 stocks ended in the green, while 2,227 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)