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

Global cues kept the market under pressure last week. On the weekly timeframe, Nifty closed on a negative note following the formation of a bearish evening star candlestick pattern. On the sectoral front, metals and PSBs led the rally, while IT turned green after continued selling pressure on Friday.

Here's how analysts read the market pulse:

Apurva Sheth, Head of Market Perspectives, Samco Securities, said the levels around 17,400 on the Nifty are likely to serve as make or break levels. A break below this level may result in a retest of the 17,100 level. Until then, traders should have a mildly bullish outlook.

Nagaraj Shetti, Technical Research Analyst, HDFC Securities, said the short term trend of Nifty is range bound with volatility and the consolidation movement is expected to continue for the next week. “We expect Nifty to trade in a range of 17,800-17,300 levels by next week. Any decisive breakout on either side is likely to accelerate momentum in the market.”

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

US market cues
The 10.7% rally in the S&P 500 from its June lows is stumbling as it runs into what has historically been the toughest month for the U.S. stock market, sparking nerves among some fund managers of a broad sell-off in September.

The S&P has been in a bear market since plummeting early this year as investors priced in the expectation of aggressive Federal Reserve interest rate hikes, but the index has rallied strongly since June, regaining half its losses for the year.

The S&P 500 fell nearly 3.4% Friday after Fed Chair Jerome Powell reiterated the central bank's commitment to taming inflation despite a possible recession.

European shares
European stocks fell as investors fretted over downbeat German consumer sentiment data due to rising energy costs.

Consumer morale in the euro zone's two biggest economies diverged starkly in August as French consumers benefited from fresh government measures while concerns over rising energy bills hit their German counterparts, surveys showed on Friday.

The pan-European STOXX 600 index lost 1.68%.

Tech View: Small bearish candle
Nifty50 formed a small bearish candle on the daily chart. On the weekly chart, the index formed a bearish candle with a long lower wick. Analysts said the index may face resistance near 17,720-225 level while they see 17,400 to act as a strong support going ahead.

Stocks showing bullish bias
Momentum indicator Moving Average Convergence Divergence (MACD) showed bullish trade setup on the counters of New India Assurance, IDBI Bank, Magma Fincorp, Kalpataru Power, PNC Infra and NLC India.

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 Thyrocare, Mahanagar Gas, Sheela Foam, Aarti Drugs, RIL and JSW Energy.

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 1,300 crore), Tata Steel (Rs 771 crore), Adani Ports SEZ (Rs 708 crore), SBI (Rs 675 crore), Kotak Bank (Rs 636 crore), and Titan Company (Rs 607 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
Tata Steel (Shares traded: 7.1 crore), NTPC (Shares traded: 3.1 crore), SBI (Shares traded: 1.3 crore), Coal India (Shares traded: 1.3 crore), ONGC (Shares traded: 1.2 crore) and Tata Motors (Shares traded: 1.1 crore) were among the most traded stocks in the session on NSE.

Stocks showing buying interest
Shares of Mazagon Dock Shipbuilders, Elgi Equipments, Uflex, Karur Vysya Bank, BEL, Indian Hotels and Westlife witnessed strong buying interest from market participants as they scaled their fresh 52-week highs, signaling bullish sentiment.

Stocks seeing selling pressure
Shares of Jet Freight Logistics and Sportking India were among those that witnessed strong selling pressure and hit their 52-week lows, signaling bearish sentiment on the counters.

Sentiment meter favours bulls
Overall, market breadth favoured winners as 1,916 stocks ended in the green, while 1,506 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)