Ahead of Market: 12 things that will decide stock action on Tuesday

NEW DELHI: Nifty50 on Monday hit a fresh record high and formed a large bullish candle on the daily chart. Analysts said the index may see some selling near the 17,000 level and traders can use the dip to build positions.

Here's how analysts read the market pulse:

Rohit Singre of LKP Securities advised traders to book some gains near the 17,000 mark and go for fresh buying on any dip near the 16,850 level. "Since the index has reached its immediate target, some resistance is likely at the 17,000 level," he said.

Mazhar Mohammad of Chartviewindia.in said, Nifty50 needs to sustain above Monday's gap zone of 16,764-722 levels to retain a positive bias. "A close below the 16,720 level can be considered as an initial sign of weakness, which can drag the index towards the 16,565 level," he said.

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

Technology stocks lift Wall Street
The S&P 500 and Nasdaq hit record highs on Monday as technology stocks jumped after the Federal Reserve's dovish comments eased fears of a sudden tapering in monetary stimulus and boosted optimism around an economic recovery. By 11:55 a.m. ET, the S&P 500 and the Nasdaq Composite added 0.59% and 0.91%, respectively. The Dow Jones Industrial Average, on the other hand, was up just 0.1% as economically sensitive energy stocks slipped 0.2%.

European stocks close flat
European stocks ended flat on Monday as a British holiday made for languid trade, but were set for strong monthly gains on expectations that continued central bank support would sustain an economic recovery. The Europe-wide STOXX 600 ended largely unchanged at 472.68 points but was on course to end August with a 2.4% rise - its seventh straight month of gains in what would be its longest such winning run in over eight years.

Tech View: Nifty support shifts higher
Nifty50 on Monday formed a large bullish candle on the daily scale and negated the indecisive candles of the previous sessions. Analysts said Monday's rally looked like a breakout, but selling cannot be ruled out near the 17,000 level. They advised traders to use any fall towards the 16,850 level to build positions.

F&O: Cooling VIX indicating bullish stance
India VIX fell 0.62 per cent from 13.40 to 13.31 level. A cool down in volatility from the recent swing highs has given a bullish stance to the market and now VIX needs to hold below the 12 level to get more buying interest in the broader market. Options data suggested a broader trading range between 16,500 and 17,250 levels while an immediate trading range was seen between 16,750 and 17,200 levels.

Stocks showing bullish bias
Momentum indicator Moving Average Convergence Divergence (MACD) showed bullish trade setup on the counters of National Aluminium, Suzlon Energy, Jaiprakash Power, IDFC First Bank, Axis Bank, GAIL (India), Coal India, L&T Finance Holdings, RBL Bank, IDFC, Karnataka Bank, Karur Vysya Bank, Jain Irrigation, Union Bank of India, Deepak Nitrite, HDFC, Indraprastha Gas, Marksans Pharma, IRB Infrastructure, DCB Bank, Bata India, Muthoot Finance, Castrol India, PI Industries, HCL Infosystem, Bajaj Auto, KEC International, Neogen Chemicals, Phoenix Mills, Future Market, CARE Ratings, Future Lifestyle, Ramco Systems, TV Today Network, Wonderla Holidays, Kirloskar Industries, Taj GVK Hotels, Shree Cement, Future Enterprises, Asian Hotels (East) and Wendt India.

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 Wipro, Tech Mahindra, JK Lakshmi Cement, Oracle Financial Service, Vishwaraj Sugar and Sasken Technologies. Bearish crossover on the MACD on these counters indicated that they have just begun their downward journey.

Most active stocks in value terms
Bharti Airtel (Rs 2413.54 crore), Tata Steel (Rs 1923.17 crore), RIL (Rs 1463.81 crore), Infosys (Rs 1115.71 crore), Bajaj Finance (Rs 1072.71 crore), Axis Bank (Rs 969.78 crore), SBI (Rs 852.11 crore), Deepak Nitrite (Rs 820.61 crore), Laxmi Organic Industries (Rs 784.92 crore) and ICICI Bank (Rs 765.66 crore) were among the most active stocks on Dalal Street 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
YES Bank (Shares traded: 11.58 crore), Vodafone Idea (Shares traded: 8.49 crore), NALCO (Shares traded: 6.20 crore), Suzlon Energy (Shares traded: 4.67 crore), Zomato (Shares traded: 4.52 crore), SAIL (Shares traded: 4.32 crore), Bharti Airtel (Shares traded: 3.98 crore), JP Power (Shares traded: 3.37 crore), PNB (Shares traded: 3.16 crore) and BHEL (Shares traded: 2.97 crore) were among the most traded stocks in the session.

Stocks showing buying interest
Indian Energy Exchange, Aster DM Health, Laxmi Organic Industries, Max Healthcare and Polycab India witnessed strong buying interest from market participants as they scaled their fresh 52-week highs, signalling bullish sentiment.

Stocks seeing selling pressure
Vertoz Advertising, Autolite (India), DQ Entertainment (International), Keerti Knowledge and Skills, Pritika Auto Industries and Shirpur Gold Refinery witnessed strong selling pressure and hit their 52-week lows, signalling bearish sentiment on these counters.

Sentiment meter favours bulls
Overall, the market breadth remained in favour of the bulls. As many as 389 stocks on the BSE500 index settled the day in the green, while 107 settled the day in the red.

Podcast: What led to today's market rally?

Dalal Street ignored the selling in IT heavyweights as investor wealth grew by Rs 3.58 lakh crore to 247.32 lakh crore during the session. Strong global cues boosted the sentiments. Sensex closed 765 points higher at 56,890. Nifty50 soared 226 points to settle above 16,930. What led to the strong rally in the Indian markets on Monday?