Ahead of Market: 10 things that will decide D-Street action on Monday

Tracking gains in other global equity markets, Indian equity indices closed in the green zone, led by gains in banking, financial and IT stocks. After climbing to 17,348 levels, the Nifty ended over 1% higher, near 17,200. However, the broader markets were laggards during the session and ended lower by a margin. On the weekly front, the index declined by 0.74%.

Here's how analysts read the market pulse:

Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services, said: “A sharp pull-back in global markets gave a head start to Indian equities. Nifty opened a gap-up and remained firm throughout the session. However, it gave up some gains in the second half, mirroring US Dow futures and finally closed with gains of 171 points (+1%). Sectors like IT and banking, including capital market stocks, were in momentum after reporting good quarterly results. Volatility index, India VIX, sharply fell by 10% to 18.3 levels, thus, supporting the overall positive sentiments in the market”.

Vinod Nair, Head of Research at Geojit Financial services, said: “During the week, investors have been risk-averse due to rising geopolitical turmoil and worries about the global economic slump.
However, compared to global counterparts, domestic sell-off was not as aggressive since FII selling was supported by DIIs inflows.”
The analyst expects the rally to continue in the short term on the back of festival demand, Q2 results and positive trend in the global market.

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

US stocks end week decisively lower
Wall Street stocks fell Friday to conclude a volatile week with markets shrugging off mostly solid bank earnings amid worries over bond yields and rising recession risk. JPMorgan Chase, Citigroup and Wells Fargo all rallied after reporting profits that exceeded analyst expectations even as they highlighted increased economic risks.

Friday's losses resumed the downward trend that had started the week, with an unexpected rally on Thursday giving markets only a brief respite.

The Dow Jones Industrial Average finished down 1.3 per cent at 29,634.83. The broad-based S&P 500 slid 2.4 per cent to 3,583.07, while the tech-rich Nasdaq Composite Index tumbled 3.1 per cent to 10,321.39.

European markets close higher
European markets closed up Friday after British Prime Minister Liz Truss fired her finance minister and scrapped parts of their economic package that has caused havoc in UK financial markets. The pan-European Stoxx 600 ended 0.7% higher but off earlier highs.

Tech View: Bearish candle on the daily chart
The Nifty established a bearish candle on the daily chart but negated its lower highs formation of the last five trading sessions. Nevertheless, on the weekly front, the index established a positive candle with upper and lower shadows, which signals the formation of a high wave-type candle pattern.

“Now, Nifty has to hold above the 17,171 zones for a bounce towards 17,333 and 17442 zones, whereas supports are placed at 17,071 and 16,950 zones,” said Chandan Taparia of Motilal Oswal.

Stocks showing bullish bias
Momentum indicator Moving Average Convergence Divergence (MACD) showed a bullish trade setup on the counters of NTPC, HDFC, Camlin Fine Sciences, UPL and Petronet LNG, 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 signalling weakness ahead
The MACD showed bearish signs on the counters of BHEL, Zee Entertainment, Som Distilleries, Reliance Industrial Infrastructure, Deepak Fertilizers and Aakash Exploration, among others.
A bearish crossover on the MACD on these counters indicated that they had just begun their downward journey.

Most active stocks in value terms
Infosys (Rs 2219 crore), RIL (Rs 1005 crore), HDFC Bank (Rs 922 crore), HDFC (Rs 905 crore), and HCL Tech (Rs 751 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 the highest trading turnovers in the day.

Most active stocks in volume terms
Tata Steel (Shares traded: 3.2 crore), Power Grid (Shares traded: 1.75 crore), Infosys (Shares traded: 1.49 crore) and Wipro (Shares traded: 1.39 crore) were among the most traded stocks in the session on NSE.

Stocks showing buying interest
Shares of Atul Auto, Apollo Micro, Kshitij Polyline, Megastar Foods and Shemaroo Entertainment, among others witnessed strong buying interest from market participants as they scaled their fresh 52-week highs, signalling bullish sentiment.

Stocks seeing selling pressure
Shares of Max Financial, Policy Bazaar, HPCL, Alembic Pharma and Alok Industries, among others, witnessed strong selling pressure and hit their 52-week lows, signaling bearish sentiment on the counters.

Sentiment meter favours bulls
The market breadth favoured gainers as 1,743 stocks ended in the green, while 1,711 names ended with cuts.

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