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

Extending losses to third straight session, benchmark equity indices ended Tuesday on a weak note. Nifty settled 0.31% lower at 18,643, while Sensex ended with a cut of 0.33% at 62,626.

Here's how analysts read the market pulse:

“The minor weakness with range-bound action continued in Nifty on Tuesday and the market closed the day lower by 58 points amidst volatility. After opening on a negative note, the market shifted into a narrow range movement which continued for the whole session. The opening downside gap remains partially filled,” Nagaraj Shetti, Technical Research Analyst at HDFC Securities, said.

"Bears kept pushing domestic indices lower amid unfavourable global cues, with significant selling in metals and IT stocks. The mood was dampened by renewed concerns over policy tightening by the Fed in response to strong economic data out of the US. Investors at home await the RBI policy meet tomorrow (on Wednesday), which is expected to slow the pace of rate hikes, in light of easing food prices,”Vinod Nair, Head of Research at Geojit Financial Services, said.

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

US market
Wall Street's main indexes fell on Tuesday, dragged down by shares of Meta Platforms and banks, while investors worried about a longer rate-hike cycle despite warnings of a potential recession next year.

Meta slid 5.8% and weighed heavily on the S&P 500 and the Nasdaq after a report on a EU ruling that said Facebook and Instagram should not require users to agree to personalized ads based on their digital activity.

Bank of America dipped 2.9% to lead declines in the financial sector. The lender's chief executive said the bank's research predicted three quarters of mild negative growth next year.

As of December 2, analysts expected S&P 500 companies to report a drop of 0.6% in fourth-quarter earnings after posting a 4.4% rise in the third quarter, according to Refinitiv IBES data. At 10:10 a.m. ET, the Dow Jones Industrial Average was down 122.67 points, or 0.36%, at 33,824.43, the S&P 500 was down 33.20 points, or 0.83%, at 3,965.64, and the Nasdaq Composite was down 159.02 points, or 1.41%, at 11,080.92.


European shares
European shares fell on Tuesday, dragged down by financials and energy stocks, as strong US services activity data spurred fears that the Federal Reserve could stick to its aggressive rate hike approach.

The region-wide STOXX 600 index slipped 0.1%, extending losses to a third straight session.

The index has logged seven straight weekly gains on hopes that signs of cooling inflation would allow the Fed to slow the pace of its rapid interest rate hikes.

Energy stocks fell 0.7%, while banks slid 0.6%. However, losses were countered by gains in consumer staples such as Nestle and Unilever Plc.

Tech View: Small positive candle
On the daily chart, a small candle was established at the lows. After the formation of bullish hammer type candle pattern on Monday, Nifty shifted into a consolidation movement at the lows on Tuesday and closed above the low of hammer at 18,591 levels. This is a positive indication and it raises hopes for an upside bounce soon in the market.

Stocks showing bullish bias
Momentum indicator Moving Average Convergence Divergence (MACD) showed bullish trade setup on the counters of Bank of India, Central Bank, Jindal Stainless, Tourism Finance and Shriram Transport Finance, among others.

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 Zomato, Rail Vikas Nigam, Easy Trip Planners, Samvardhana Motherson and Tata Motors, 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
Craftsman Automation (Rs 373 crore), Sapphire Foods (Rs 92 crore), IIFL Wealth (Rs 80 crore), PNB (Rs 57 crore) and RIL (Rs 53 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 termsVodafone Idea (Shares traded: 4.45 crore), Suzlon Energy (Shares traded: 3.96 crore), Yes Bank (Shares traded: 1.59 crore), JP Power (Shares traded: 1.55 crore) and IRFC (Shares traded: 1.19 crore) were among the most traded stocks in the session on the NSE.

Stocks showing buying interest
Shares of Punjab Sind Bank, Union Bank of India, J&K Bank, Bank of India and Bank of Baroda witnessed strong buying interest from market participants as they scaled their fresh 52-week highs, signalling bullish sentiment.


Stocks seeing selling pressure
No shares hit their 52-week lows on Tuesday, which signals bearish sentiment on the counters.

Sentiment meter favours bears
Overall, market breadth favoured bears as 1,563 stocks ended in the green, while 1,936 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)