Ahead of Market: 10 things that will decide stock action on Monday

After the crisis-ridden banks were bailed-out in the overseas markets, equities in India on Friday ended higher for the second consecutive day. Nifty logged 0.7% gains and topped 17,100 levels. Within the Nifty pack, top gainers were HCL Technologies, Hindalco, UPL, Nestle and UltraTech Cement.

Here's how analysts read the market pulse:
“Following the sharp rebound in the global markets, the domestic indices took a breather in hopes of relief from the global banking turmoil. Global equities reversed their selling streak on reports of a rescue package for the beleaguered First Republic Bank, along with an aid provided to Credit Suisse from the Swiss Central Bank, which would soothe concerns over the global financial stability. On the other hand, the ECB further raised its rates by 50 bps, indicating its preparedness to provide liquidity to banks upon necessity,” Vinod Nair, Head of Research at Geojit Financial Services, said.

“We believe that the pullback rally has some more steam left and the Nifty is likely to carry on this positive momentum next week as well,”Jatin Gedia, Technical Research Analyst, Sharekhan by BNP Paribas, said.

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

US stocks end lower
US stocks ended lower Friday as banking shares resumed their selloff, with embattled First Republic Bank closing down 33 percent despite a $30 billion rescue package unveiled Thursday.

The Dow Jones Industrial Average ended 1.2 percent lower at 31,861.98 and the broad-based S&P 500 fell 1.1 percent to 3,916.64.

Meanwhile, the tech-heavy Nasdaq Composite Index declined 0.7 percent to end at 11,630.51.

European shares record worst week in five months
European shares erased their early gains on Friday and logged their steepest weekly drop in five months as supportive measures from regulators across the United States and Europe failed to allay fears over a brewing global banking crisis.

The pan-European STOXX 600 closed the day 1.3% lower, dragged by bank, insurance and financial services stocks.

The bank index lost 2.6%, with HSBC, BNP Paribas , Allianz SE and UBS Group losing between 1% and 3%.

Tech View: Small body of negative candle
A small body of negative candle was formed on the daily chart with a long lower shadow. Technically, this pattern indicates a formation of long legged doji type candle pattern (not a classical one). “The current market action suggests that the market is in the process of near term bottom formation,” Nagaraj Shetti, Technical Research Analyst, HDFC Securities, said.

Stocks showing bullish bias
Momentum indicator Moving Average Convergence Divergence (MACD) showed bullish trade on the counters of Bank of India, Vedanta, HDFC Life Insurance, Hindustan Zinc and Aurobindo Pharma among others.

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 signaling weakness ahead
The MACD showed bearish signs on the counters of Power Finance Corporation, Sonata Software, CCL Products, Ajanta Pharma and Isgec Heavy Engineering 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 3494 crore), TCS (Rs 2142 crore), ITC (Rs 1828 crore), HDFC Bank (Rs 1785 crore) and Kotak Bank (Rs 1508 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: 44.54 crore), Zomato ((Shares traded: 11.29 crore), Vodafone Idea (Shares traded: 7.95 crore), NALCO (Shares traded: 6.62 crore) and Nykaa (Shares traded: 5.46 crore) were among the most traded stocks in the session on NSE.

Stocks showing buying interest
Shares of NCC, Godrej Consumer, KPIT Technologies and Ramkrishna Forgings witnessed strong buying interest from market participants as they scaled their fresh 52-week highs, signaling bullish sentiment.

Stocks seeing selling pressure
Shares of Biocon, Eris Lifesciences, Piramal Pharma, Pfizer, Motilal Oswal, Avanti Feeds and Vinati Organics among others hit their 52-week lows, signaling bearish sentiment on the counters.

Sentiment meter favours bulls
Overall, market breadth favoured bulls as 2,047 stocks ended in the green, while 1,454 names 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)