Ahead of Market: 12 things that will decide D-Street action on Thursday

NEW DELHI: Domestic equity markets remained under pressure on Wednesday, marking the fourth straight session of weakness. Selling in index heavyweights dragged the indices lower.

Despite the recovery in the global markets, Indian equities were under severe pressure. Domestic stocks eroded Rs 28 lakh crore worth of investor wealth in just one month.

Here's how analysts read the market pulse:-

Wednesday's market action indicates a chance of a round of pullback rally in the short term, said Nagaraj Shetti of HDFC Securities, who added that there is no confirmation of any bottom reversal as of now.

Mazhar Mohammad of Chartviewindia.in said Wednesday's candle formation has a bullish connotation provided, it is followed by a positive close in the next trading session.

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

S&P 500, Dow up after inflation data
The S&P 500 and the Dow rose in choppy trading on Wednesday as banks and energy shares gained, while the tech-heavy Nasdaq came under pressure after inflation data cemented expectations of aggressive interest rate hikes.

Ten of the 11 major S&P sectors advanced in morning trade. Energy gained 3.4% as oil prices jumped over 4% buoyed by supply concerns.

At 10:14 a.m. ET, the Dow Jones Industrial Average was up 232.89 points, or 0.72%, at 32,393.63, the S&P 500 was up 21.84 points, or 0.55%, at 4,022.89, and the Nasdaq Composite was down 15.61 points, or 0.13%, at 11,722.06.

European stocks log best session in 6 weeks
European stocks locked in gains for a second straight session on Wednesday as strong earnings and a surge in economically sensitive sectors boosted sentiment after U.S. inflation growth slowed sharply in April.

The continent-wide STOXX 600 index rose 1.7%, registering its biggest one-day percentage gain since late March. Miners, automakers and oil & gas gained more than 3% each.

A handful of upbeat earnings reports and merger activity kept investor sentiment firm for the day.

Tech View: Hammer-like candle formed
Nifty50 fell for the fourth straight session and formed a Hammer-like candle on the daily chart that had a long lower wick, reflecting the intraday recovery.

F&O: Resistance at 16,500
In the derivatives segment, since 16,000 put option on both weekly as well as monthly series have decent open interest outstanding, this is the immediate support seen.

A breakdown below this will then lead to the unwinding of positions which could create more pressure on the markets, said Ruchit Jain, Lead Research, 5paisa.com.

"On the other hand, the immediate resistance in Nifty is seen around 16,260 which is the ‘hourly 20 EMA’ and if the index manages to surpass this hurdle, then 16,350-16,400 would be the next range to watch out," he added.

Stocks showing bullish bias
Momentum indicator Moving Average Convergence Divergence (MACD) showed a bullish trade setup on the counters of Indus Towers, Nila Spaces, Kavveri Telecom and Sintercom India.

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 Mangalore Refineries, Ruchi Soya, Tata Chemicals, Shriram Transport, TARC, Shanthi Gears, SMC Global Securities and Paisalo Digital. A bearish crossover on the MACD on these counters indicated that they had just begun their downward journey.

Most active stocks in value terms
Reliance Industries (Rs 1,885.17 crore), Tata Steel (Rs 1,238.69 crore), Infosys (Rs 1,196.66 crore), HDFC Bank (Rs 1,149.05 crore), Tata Motors (Rs 1,127.91 crore), Bajaj Finance (Rs 1,086.40 crore) and ICICI Bank (Rs 965.56 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 the highest trading turnovers in the day.

Most active stocks in volume terms
Tata Motors (Shares traded: 2.92 crore), Coal India (Shares traded: 2.06 crore), ITC (Shares traded: 1,73 crore), ONGC (Shares traded: 1.5 crore), SBI (Shares traded: 1.48 crore), Hindalco (Shares traded: 1.42 crore) and NTPC (Shares traded: 1.38 crore) were among the most traded stocks in the session on NSE.

Stocks showing buying interest
None of the stocks witnessed buying interest from market participants.

Stocks seeing selling pressure
Indiabulls Housing Finance, Welspun India, Infibeam Avenues, Nazara Technologies, Indo Count Industries, ITI and Indiabulls Real Estate witnessed strong selling pressure and hit their 52-week lows, signalling bearish sentiment on the counters.

Sentiment meter favours bears
Overall, market breadth favoured losers as 730 stocks ended in the green, while 2,666 names settled with cuts.

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