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

Indian indices ended weak for the third consecutive day on Thursday ahead of the release of key inflation data in the US and India. At the close, Nifty settled with a cut of around 38 points at 17,858. Sector-wise, auto, IT and realty packs logged gains, while all other indices posted cuts, with the maximum seen for Nifty Private Bank index.

Here's how analysts read the market pulse:

“Nifty remained volatile throughout the session with mostly a bearish bias as it closed below the crucial short-term moving average (50 EMA). The daily RSI is in bearish crossover on the daily timeframe, suggesting sluggish momentum. Over the short term, the trend is likely to remain sideways or negative. On the higher end, resistance is visible at 18,000. On the lower end, support is visible at 17,750,” said Rupak De, Senior Technical Analyst at LKP Securities.

“In the near term, investors will take cues from inflation data as this will provide direction to central banks for rate hike. The IT sector too would remain in focus after Cyient reported better than expected results while Infosys reported decent numbers. Management commentary and growth guidance would be the key driver for the sector. Momentum is likely to continue in metals with a surge in copper prices to 6 months’ high fuelled by China's reopening and weakening dollar,” said Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services.

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

US market
Wall Street's main indexes rose in choppy trade on Thursday as cooling inflation supported bets of smaller interest rate hikes by the Federal Reserve, though concerns remained that the central bank would keep hiking rates further.

The Labor Department's report showed U.S. consumer prices grew 6.5% on an annual basis in December, in line with expectations, from a 7.1% rise last month. Core inflation was in line with expectations as well.

However, headline inflation remains above the Fed's 2% target. All the three main stock indexes swung between gains and losses after the report. At 10:23 am ET, the Dow Jones Industrial Average was up 102.09 points, or 0.30%, at 34,075.10, the S&P 500 was up 5.86 points, or 0.15%, at 3,975.47, and the Nasdaq Composite was up 13.98 points, or 0.13%, at 10,945.65.

European shares
European shares edged higher on Thursday amid caution ahead of US inflation data that could sway the monetary policy direction at the world's largest economy, while Logitech dropped on cutting sales outlook after quarterly miss. The pan-European STOXX 600 rose 0.3% by 0810 GMT.

Tech View: Small negative candle
A small negative candle was formed on the daily chart with lower shadow. We observe two consecutive candles with lower shadows in the last couple of sessions. On Thursday, the market moved below the crucial lower support of 17,800 levels but managed to pull back from the lows.

“The formation of triangle type pattern on the daily chart is intact and Nifty was seen holding on the lower end of the triangle at 17,800 levels, with a false downside breakout on Thursday. The market is still struggling to sustain the highs and we observe consistent formation of lower swing highs on the daily chart,” said Nagaraj Shetti, Technical Research Analyst, HDFC Securities.

Stocks showing bullish bias
Momentum indicator Moving Average Convergence Divergence (MACD) showed bullish trade on the counters of Brightcom Group, RVNL, Power Grid, Rico Auto and Railtel Corporation, among others.

The MACD is known for signalling trend reversals in 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 IDBI Bank, Gail (India), Shipping Corporation of India and CSB Bank, 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
RIL (Rs 2,030 crore), Paytm (Rs 1,919 crore), ICICI Bank (Rs 1,431 crore) and Infosys (Rs 971 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 on the day.

Most active stocks in volume terms
Yes Bank (Shares traded: 20.65 crore), Vodafone Idea (Shares traded: 8.27 crore), Suzlon Energy (7.53 crore), and PNB(Shares traded: 5.81 crore) were among the most traded stocks in the session on NSE.

Stocks showing buying interest
Shares of PNB Housing, Mahindra CIE, Archean Chemical Industries and CG Power and Industrial Solutions witnessed strong buying interest from market participants as they scaled their fresh 52-week highs, signalling bullish sentiment.

Stocks seeing selling pressure
Shares of Gland Pharma, Laurus Labs, Vodafone Idea, KFin Technologies and Galaxy Surfactants among others hit their 52-week lows on Tuesday, which signals bearish sentiment on the counter.

Sentiment meter favours bears
Overall, market breadth favoured bears as 1,992 stocks ended in the red while 1,514 names settled with gains.

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