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

Even as clouds of uncertainty hover over the global banking system amid Credit Suisse woes and bank failures in the US, the domestic equity market on Thursday snapped the five-day losing streak as a positive opening in the European market lifted investor sentiments.

Benchmark Sensex recouped its lost ground and closed 78 points higher on fag-end value buying in banking, energy and financial stocks. Nifty closed with tad gains, just shy of 17,000 levels, led by gains in the energy space.

Here's how analysts read the market pulse:

“With the turbulence at Credit Suisse and ahead of the ECB policy announcement, investors' attention has switched to developments in the European market. Consistently unfavourable signs in global markets are encouraging investors to move to safe havens such as the dollar and gold, while FIIs are withdrawing funds from the domestic market in response to the Indian rupee's depreciation. Though the SVB & Credit Suisse crisis has eased, the market lacks the confidence to hold positions on contagion fears,” said Vinod Nair, Head of Research at Geojit Financial Services.

“Technically, the market is oversold, and we may see a bounce up to 17,200 with support at 16,800-16,750. Looking at the global market, there is a possibility of a small bounce, but the overall trend remains bearish,” Prashanth Tapse - Research Analyst, Senior VP (Research), Mehta Equities, said.

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

US market
Wall Street's main indexes reversed declines on Thursday after a report said some U.S. big banks were in talks with First Republic Bank for a potential deal, while comments from Treasury Secretary Janet Yellen also boosted investor sentiment. The report follows a 50 basis point rate hike by the European Central Bank, which earlier in the day had dampened investor sentiment already hurt by fears of a banking crisis.

The Wall Street Journal report said JP Morgan Chase & Co and Morgan Stanley were among banks in deal talks with First Republic Bank that could include a sizable capital infusion and even a full takeover of the bank.

At 11:31 a.m. ET, the Dow Jones Industrial Average was up 110.15 points, or 0.35%, at 31,984.72, the S&P 500 was up 36.60 points, or 0.94%, at 3,928.53, and the Nasdaq Composite was up 171.27 points, or 1.50%, at 11,605.33.

European shares
European shares erased their gains on Thursday as a 50-basis-point interest rate hike by the European Central Bank amid the crisis surrounding Credit Suisse and other U.S. lenders deepened investors' concerns over the region's banking sector.

The STOXX 600 was down 0.1% by 1330 GMT, testing a 10-week low, after rising as much as 1.4% in early trading. The index is on track to lose nearly 4% so far this week, dragged down by bank stocks in the aftermath of U.S. lender Silicon Valley Bank's collapse last week. The banks sector index fell 0.4%, after logging its steepest one-day drop in more than a year in the previous session.Tech View: Small candle
A small candle was formed on the daily chart with upper and long lower shadow. Technically, this pattern indicates a formation of long legged Doji type candle pattern. Normally, this displays high volatility in the market and such formations post reasonable weakness could be considered as a reversal pattern on the upside after confirmation.

Stocks showing bullish bias
Momentum indicator Moving Average Convergence Divergence (MACD) showed bullish trade on the counters of ICICI Prudential, DLF, Titan, Indian Hotels and Dabur India, 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 Zen Technologies, JBM Auto, Finolex Cables, Inox Wind, and KNR Construction 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
Samvardhana Motherson (Rs 2,926 crore), RIL (Rs 1,889 crore), Adani Enterprises (Rs 1,197 crore), ICICI Bank (Rs 1,231 crore) and HDFC Bank (Rs 1,682 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
Samvardhana Motherson (Shares traded: 41.99 crore), Yes Bank ((Shares traded: 20.77 crore), Tata Steel (Shares traded: 8.1 crore), Vodafone Idea (Shares traded: 7.06 crore) and Zomato (Shares traded: 6.12 crore) were among the most traded stocks in the session on NSE.

Stocks showing buying interest
Shares of NCC, Cadila Healthcare, Petronet LNG and HG Infra witnessed strong buying interest from market participants as they scaled their fresh 52-week highs, signaling bullish sentiment.

Stocks seeing selling pressure
Shares of Jubilant Pharmova, Trident, Avanti Feeds, Emami, Sun Pharma, CDSL and HDFC Life among others hit their 52-week lows, signaling bearish sentiment on the counters.

Sentiment meter favours bears
Overall, market breadth favoured bears as 1,268 stocks ended in the green, while 2,252 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)