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

NEW DELHI: Stock market bulls scripted a turnaround on Tuesday, taking benchmark indices higher thanks to buying in IT stocks. This also negated the negative impact of the hawkish US Fed commentary.

Here's how analysts read the market pulse:-

Shrikant Chouhan of Kotak Securities said that the index took the support near the 200-day SMA or 17,000 and reversed quickly. A long bullish candle on the daily chart is broadly positive, he said.

Nagaraj Shetti, Technical Research Analyst at HDFC Securities said after a decisive upside breakout of the important cluster resistance of around 16,800-17,000 levels recently, the downward correction has halted at the previous broken resistance of 17,000.

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

US stocks gain
Wall Street's main indexes opened higher on Tuesday, as bank shares gained on growing bets of aggressive interest rate increases by the Federal Reserve and sportswear maker Nike rose after upbeat quarterly results.

The Dow Jones Industrial Average rose 30.25 points, or 0.09%, at the open to 34,583.24.

The S&P 500 opened higher by 7.92 points, or 0.18%, at 4,469.10, while the Nasdaq Composite gained 27.97 points, or 0.20%, to 13,866.43 at the opening bell.

European markets rise
European stock indexes rose Tuesday and U.S. and European government bond yields extended the previous session's gains as investors adjusted their expectations for rate hikes following hawkish comments from the U.S. Federal Reserve.

The MSCI world equity index, which tracks shares in 50 countries, was up 0.2% on the day.

The STOXX 600 was up 0.4%, having climbed high in recent sessions to reach a one-month high. London's FTSE 100 was up 0.4%.

Tech View: Bullish candle
Nifty50 on Tuesday saw strong buying at its support level of 17,000 and ended up forming a bullish candle on the daily chart. Analysts said the index can see resistance at around 17,500. They see immediate support for the index at 17,200.

F&O: Resistance at 17,500
The option chain data shows that a major resistance is shifting to 17600 now at the same time 17,000 level is emerging as a support level.

Stocks showing bullish bias
Momentum indicator Moving Average Convergence Divergence (MACD) showed bullish trade setup on the counters of Ratnamani Metal, Schneide, Lakshmi Machine, Hinduja Global Schaeffler India and Thyrocare Tech.

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 NLC India, Avenue Supermart and Apollo Hospital. Bearish crossover on the MACD on these counters indicated that they have just begun their downward journey.

Most active stocks in value terms
Reliance Industries (Rs 2,611 crore), HDFC (Rs 1,514 crore), Paytm (Rs 1,456 crore), Tata Motors (Rs 1,316 crore), SBI (Rs 1,272 crore), Tata Steel (Rs 1,070 crore) and Infosys (Rs 1,070 crore) were among the most active stocks on Dalal Street 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
Vodafone Idea (Shares traded: 10 crore), YES Bank (Shares traded: 8 crore), GTL Infra (Shares traded: 5 crore), IDFC First Bank (Shares traded: 4 crore), PNB (Shares traded: 5 crore) and SAIL (Shares traded: 4 crore) were among the most traded stocks in the session on NSE.

Stocks showing buying interest
Chalet Hotels, Ratnamani Metal, GNFC, Ingersoll-Rand, Century Ply, Polyplex Corporation and Vedanta witnessed strong buying interest from market participants as they scaled their fresh 52-week highs, signaling bullish sentiment.

Stocks seeing selling pressure
Dhani Services, Future Retail, Castrol India and Mishra Dhatu Nigam witnessed strong selling pressure and hit their 52-week lows, signaling bearish sentiment on the counters.

Sentiment meter favours bears
Overall, market breadth favoured losers as 1,629 stocks ended in the green, while 1,780 names settled with cuts.

Market Watch: How should investors time their entry in this market?

After beginning the day on a subdued note, domestic stock markets rallied by the end of the session as heavy buying in IT counters lifted headline indices. Hawkish rate hike guidance by US Fed Chair Jerome Powell and a continued rise in crude oil prices amid the intensifying war in Ukraine ensured that traders were on tenterhooks at the start of trade. However, the strong buying in IT companies - which as exporters tend to perform better when the rupee depreciates – auto, oil and gas and financial counters lifted the benchmark indices.