Ahead of Market: 10 things to determine D-St action on Tuesday

Buoyed by a positive start to the Q2 earnings season, benchmark indices gained decent strength on Monday. Nifty ended above 17,300, gaining 0.73%. Bank Nifty gained over 1.5%. Among sectoral indices, Nifty PSU Bank emerged as the outlier as Nifty Realty, Nifty Media and Nifty Metals plunged.

Here’s how analysts read the market pulse:

Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services, said “ Domestic equities gained strength despite mixed global cues. Nifty has managed to stay above 17k zones and close near day’s high with gains of 126 points (+0.7%) at 17,312. Sectorially, it was a mixed bag with banking and financial services being the key sectors providing strength to the market. They rallied on the back of good pre-quarterly updates and the healthy results reported by HDFC Bank and Federal Bank.”

Rupak De, Senior Technical Analyst at LKP Securities, said, “Nifty witnessed a positive session as the benchmark index closed with a gain at the end of the day. On the daily chart, the index has formed a piercing line pattern, which suggests a bullish reversal. The trend and momentum remain positive for the short term. Over the short term, the index is likely to go towards 17,500/17,700. On the lower end, support is visible at 17,100."


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

US stocks rally at start of heavy earnings week
Wall Street stocks jumped early Monday after British officials dropped more controversial tax cut measures, reassuring markets ahead of a heavy week of earnings. In the latest U-turn by Britain's Conservative Party, newly-installed finance chief Jeremy Hunt scrapped plans to axe the lowest rate of income tax, and curbed the government's flagship energy price freeze.

The moves bolstered the British pound and pushed lower British bond yields after prior announcements by predecessor Kwasi Kwarteng tanked financial markets.

About 25 minutes into trading, the Dow Jones Industrial Average was up 1.9% at 30,200.72. The broad-based S&P 500 gained 2.6% to 3,675.52, while the tech-rich Nasdaq Composite Index advanced 3.2% to 10,647.88.

In the latest earnings announcement, Bank of America rose 4.2% after reporting better-than-expected results despite adding $378 million in reserves due to the risk defaults of bad loans.


Europe rallies as UK U-turns settle nerves
Europe's shares, bonds and major currencies rallied on Monday, helped by relief that Britains’ new finance minister had quickly shredded virtually all of the unfunded tax cuts that triggered UK market turmoil this month. Europe's STOXX 600 made 0.6% and Wall Street futures were up over 1% as the pound and UK government bonds soared in London. Britain's new finance minister Jeremy Hunt announced he was reversing “almost all” the tax measures laid out by Prime Minister Liz Truss and his predecessor Kwasi Kwarteng just three weeks ago.

Tech View: Long bull candle was formed on the daily chart
On the daily chart, a long bull candle was formed and placed beside the long negative candle of Friday. Technical analysts suggested that this pattern indicated the comeback of bulls after consolidation of the previous session.


Stocks showing bullish bias
Momentum indicator Moving Average Convergence Divergence (MACD) showed bullish trend on the counters of NHPC, BHEL, Canara Bank, BLS International, Bank of Maharashtra and Tata Power.

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 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 Hindustan Construction, IDBI Bank, Ujjivan SFB, DCW and Jubilant Ingrevia, 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 1,834 crore), HDFC Bank (Rs 1,328 crore), Tata Elxsi (Rs 938 crore), HDFC (Rs 824 crore), and ICICI Bank (Rs787 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 in the day.

Most active stocks in volume terms
Suzlon Energy (Shares traded: 24.97 crore), Yes Bank (Shares traded: 8.39 crore), Zomato (Shares traded: 5.60 crore) and IDFC First Bank (Shares traded: 4.35 crore) were among the most traded stocks in the session on the NSE.

Stocks showing buying interest
Shares of BLS International Services, Godfrey Phillips, Data Patterns, City Union Bank and IDFC, 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 Alok Industries, Nykaa, Policy Bazaar, Suven Pharma and HPCL among others witnessed strong selling pressure and hit their 52-week lows, signalling bearish sentiment on the counters.

Sentiment metre favours bears
Overall, market breadth favoured losers as 2,009 stocks ended in the red, while 1,520 names ended in the green.

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