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

NEW DELHI: Indian market has seen almost a 33% rally from the lows seen in March 2020. Now this has created a dichotomy between the markets and the economy. Analysts said while the current market rally seems to have the momentum, one has to be watchful about how the Covid-19 crisis is managed over the next few weeks and months and how the economy responds to the same.

The weekend data on non-farm payroll in the US was a positive surprise, as was the unemployment rate, which came in lower than expected, triggering a sharp rally in US stocks.

Analysts said Nifty on Friday could not top the 10,200 level, which seems to be acting as a crucial resistance. .

Vinod Nair of Geojit Financial Services said investors are banking on global economic recovery, but they need to be a bit cautious since valuations are running high and the expected recovery is not yet visible in the numbers.

Ajit Mishra of Religare Broking said Nifty is facing an immediate hurdle around the 10,250 mark, but the banking index still has some steam left, which could help the index to inch higher.

"The index is now approaching crucial moving averages and resistance clusters, which might act as resistance going ahead. The trend on a higher time frame for Nifty is bearish and it is trading just above 20-week EMA,” said Jimeet Modi, Founder & Chief Executive Officer, SAMCO Securities.

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

Surprise payroll data lifted Dow 829 pts
Dow continued its five-day rally on Friday, and closed some 829 points, or over 3 per cent, higher after the monthly jobs report revealed 2.5 million positions were added to the economy in May, marking the largest monthly gain on record. The S&P500 closed up 2.6 per cent and the Nasdaq 2 per cent, reaching a record high.

European shares log gains on ECB booster
European stocks pushed higher on Friday, helped by more support from the ECB, which boosted hopes of a relatively speedy recovery in the region. Equity indices posted strong gains this week, with the DAX up 9.7 per cent and the CAC 40 9.4 per cent , but the FTSE 100 underperformed, rising just 5.7 per cent.

Tech View: Bullish candle on Nifty chart
Nifty50 defended its immediate support at 10,000 level throughout Friday's session. The index formed a bullish candle on the daily chart, as the bulls were not willing to give in following Thursday's fall. This was the second week of sharp gains for Nifty50, which has now reached its 20-week moving average on the weekly chart. Analysts said the index has the potential to move towards the 10,300 level, as there are no sign of weakness on technical charts

F&O: Nifty range now at 9,800-10,300
Nifty’s maximum Put open interest stood at 9,000 followed by 9,500 levels, while maximum Call OI was at 10,000 followed by 11,000 level. Marginal Call writing was seen in 10,500 followed by 10,400 levels, while there was meaningful Put writing at 9,500 and 9,900 levels. Options data suggested a wider trading range between 9,800 and 10,300 levels.

Stocks showing bullish bias
Momentum indicator Moving Average Convergence Divergence (MACD) on Friday showed bullish trade setup on the counters of TV18 Broadcast, Tata Consumer Products, Sequent Scientific, Venky's (India), Indoco Remedies, PI Industries, Den Networks, Dr. Lal Pathlabs, Parag Milk Foods and Kabra Extrusion, among others.

Stocks signalling weakness ahead
The MACD showed bearish signs on the counters of Redington (India). Bearish crossover on the MACD on these counters indicated that they have just begun their downward journey.

Most active stocks in value terms
Bajaj Finance (Rs 3719.62 crore) , SBI (Rs 3673.76 crore) , Bharti Airtel (Rs 2767.65 crore) , Reliance Industries (Rs 2433.84 crore) , Tata Motors (Rs 2002.29 crore) , HDFC Bank (Rs 1798.38 crore) , Vodafone Idea (Rs 1747.15 crore) , Axis Bank (Rs 1555.99 crore) and, ICICI Bank (Rs 1314.10 crore) and HDFC (Rs 1180.97 crore) were among the most active stocks on Dalal Street on Friday in value terms.

Most active stocks in volume terms
Vodafone Idea (Shares traded: 179.61 crore) , SBI (Shares traded: 20.13 crore) , Tata Motors (Shares traded: 18.72 crore) , PNB (Shares traded: 9.61 crore) , Ashok Leyland (Shares traded: 8.66 crore) , Bank of Baroda (Shares traded: 7.80 crore) , NCC (Shares traded: 6.29 crore) , SAIL (Shares traded: 5.96 crore) , Uttam Value Steel (Shares traded: 5.66 crore) and Tata Power (Shares traded: 5.52 crore) were among the most traded stocks in the session.

Stocks seeing buying interest
Torrent Power, Alok Industries, Alkyl Amines, GMM Pfaudler and RIL witnessed strong buying interest from market participants as they scaled their fresh 52-week highs on Friday signalling bullish sentiment.

Stocks witnessing selling pressure
Hotel Rugby, Madhya Bharat Agro Products and Supreme Infrastructure India witnessed strong selling pressure in Friday’s session and hit their 52-week lows, signalling bearish sentiment on these counters.

Sentiment meter favours bulls
Overall, market breadth remained in favour of bulls. As many as 423 stocks on the BSE 500 index settled the day in green, while 78 settled the day in red.

Podcast: What to stay with - telecom, SBI stocks or midcaps?
In another stellar week for the market, the bulls defied all odds to end on a firm note. The guesses about the market drivers are too many:- from signs of rural recovery to hopes of more India weightage in MSCI, FTSE rejig to the big-bang return of FIIs and what not! But the million-dollar question is: can the market sustain at these levels.