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

Indian indices lost a substantial 1% in the third trading session of the new year after a two-day rally as investors took money off the table ahead of the release of US Fed meeting minutes. Unabated foreign fund outflows also weighed on sentiment, traders said.

The 30-share BSE Sensex slumped 637 points or 1.04% to settle at 60,658. The broader NSE Nifty ended lower by 190 points or 1.04%at 18,043.

All the sectoral indices ended with sharp cuts in a volatile trading session, which saw India VIX gain by over 5%.

Here's how analysts read the market pulse:
“Domestic equities finally scummed to global pressure and retreated towards 18k levels. Cautiousness ahead of the release of FOMC meeting minutes led to some profit booking in the index heavy weights. Nifty opened on a subdued note and selling continued throughout the day to close near day’s low with loss of 190 points (-1%) at 18,043,” Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services, said.

“Bears remained at the helm, taking the benchmark Nifty about 190 points lower from the previous closing. On the 4-hourly chart, the index has given an upward consolidation breakdown; besides, the shorter moving average (21 EMA) finished the day lower than the longer moving average (50 EMA), confirming the bearish scenario,” Rupak De, Senior Technical Analyst at LKP Securities, said.

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

US market:
Wall Street's main indexes were subdued on Wednesday as data showed U.S. job openings fell less than expected, fuelling investor anxiety about interest rate hikes ahead of the Federal Reserve's December meeting minutes.

A survey from the Labor Department showed job openings fell 54,000 to 10.458 million on the last day of November, compared with expectations of 10 million job openings.

The data indicated a still tight labor market that could give the Fed cover to keep rates higher for longer.

Meanwhile, Apple Inc rose 0.6%, while electric-vehicle maker Tesla Inc jumped 2.3%, with both the shares recovering from a searing drop in the previous session. The gains eased some of the pressure on the benchmark S&P 500 index.

Minutes from the Fed's previous meeting, when it raised interest rates by half a percentage point and cautioned rates may need to remain higher for longer, are due to be released at 2 p.m. ET (1900 GMT). Market participants see a 68% chance of a 25-basis point rate hike from the Fed in February, and see rates peaking at 4.99% by June. At 10:28 a.m. ET, the Dow Jones Industrial Average was down 37.17 points, or 0.11%, at 33,099.20, the S&P 500 was up 0.44 points, or 0.01%, at 3,824.58, and the Nasdaq Composite was down 26.38 points, or 0.25%, at 10,360.61.

European shares:
European shares extended gains on Wednesday as a lower inflation reading from France, the euro zone's second-biggest economy and better-than-expected business activity data boosted sentiment. The pan-European STOXX 600 rose 0.8%, while France's CAC 40 added 1.3%. Data on Wednesday showed euro zone business activity contracted less than initially thought, suggesting the bloc's recession may not be as deep as feared.

Investors are waiting for the minutes from the Fed's December meeting for cues on the U.S. central bank's monetary policy tightening path.

Tech View: Long bear candle:
A long bear candle was formed on the daily chart that indicates downside breakout of the recent sideways range movement in the market. After the downside breakout of ascending trend line support on December 23, the market showed gradual pullback rally in the next 6-7 sessions and broke down from the highs on Wednesday from near the resistance of the up trend line.

Stocks showing bullish bias:
Momentum indicator Moving Average Convergence Divergence (MACD) showed bullish trends on the counters of RCF, IOC, IRB Infra, Axis Bank and HDFC Life Insurance, among others.

The MACD is known for signalling trend reversals in traded securities or indices. When the MACD crosses above the signal line, it gives a bullish sign, 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 Indiabulls Housing Finance, JSW Steel, Oil India, JSW Ispat and Finolex Industries, 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:
ICICI Bank (Rs 1,121 crore), RILl (Rs 1,082 crore), Infosys (Rs 1,060 crore) and IndusInd Bank (Rs 986 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: 39.51 crore), Vodafone Idea (Shares traded: 12.71 crore), Suzlon Energy (Shares traded: 11.35 crore), and PNB (Shares traded: 9.68 crore) were among the most traded stocks in the session on NSE.

Stocks showing buying interest:
Shares of GIC, Equitas SFB and Axis Bank hit their 52-week highs, which signal bullish sentiment on the counter.

Stocks seeing selling pressure:
Shares of Aavas Financiers and Galaxy Surfactants hit their 52-week lows, which signal bearish sentiment on the counter.

Sentiment meter favours bears:
Overall, market breadth favoured bulls as 1,136 stocks ended in the green, while 2,351 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)