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

The Nifty ended 196.75 points or 1.51 per cent lower to settle at 12,858.40 after the headline index saw a sharp selloff in the afternoon session forming a 'Bearish Engulfing' pattern. Analysts signalled a creeping paranoia in the market as any further recovery will be vulnerable to selloffs.

The headline index snapped its three-day winning streak, tracking heavy profit-booking in banking and IT majors amid mixed cues from global markets. The blue chip index traded with a 300-point intraday high-low range giving out signs of fatigue.

Mazhar Mohammad of Chartviewindia.in said that the index could turn sideways only if it manages to defend the recent low of 12,833 in Thursday's trade.

"The market rally, which was led by developments on vaccine and FPI inflows, came to a halt today due to profit booking across sectors in the second half of the trading session. While western markets continued its positivity, we can expect profit booking to continue in our domestic market in the short-term as the liquidity driven rally can take a pause having reached all-time high on a monthly basis,” said Vinod Nair, Head of Research at Geojit Financial Services.

That said, here’s a look at what some of the key indicators are suggesting for Thursday's action:
US shares fall as labor market recovery slows
Wall Street's main indexes fell at the open on Wednesday as a surprise jump in weekly jobless claims added to signs the recovery of the labor market was stalling amid a surge in COVID-19 infections. The Dow Jones Industrial Average was down 118.63 points, or 0.39%, at the open to 29,928.23. The S&P 500 opened flat at 3,628.61, while the Nasdaq Composite gained 23.11 points, or 0.19%, to 12,059.85at the opening bell.

European shares hover near 9-month highs
European shares eased slightly, while staying near nine-month highs on Wednesday as a relaxation of coronavirus restrictions in the region and growing hopes that a vaccine would soon be ready kept sentiment afloat. The pan-European STOXX 600 index inched lower by 0.1% as gains in the utility and telecom sector were outweighed by losses in automobile stocks .

Tech view: Nifty forms 'Bearish Engulfing' candle
Nifty50 saw steep selling pressure after hitting a record high on Wednesday, as the index ended up forming a 'Bearish Engulfing' candle on the daily chart. For now, any recovery on the index will be vulnerable to selloffs, said analysts. The daily momentum indicator has triggered a bearish crossover, said Gaurav Ratnaparkhi, Senior Technical Analyst at Sharekhan.

Check out the candlestick formations in the latest trading sessions

F&O: VIX sees a spike
India VIX went up by 9.82 per cent from 21.06 to 23.12. Volatility has increased in the past few sessions, suggesting that the ongoing momentum could take a pause going ahead. Call writing was seen at 13,000 and 12,900, while Put unwinding was seen at immediate strike prices. Options data suggested a wider trading range in between 12,750 and 13,050 levels.

Stocks showing bullish bias
Momentum indicator Moving Average Convergence Divergence (MACD) on Wednesday showed bullish trade setup on the counters of Religare Enterprises, Crompton Greaves, Cineline India, Camlin Fine Sciences, Aditya Birla Money, Centrum Capital, Prakash Industries, Lasa Supergenerics, Anjani Portland, KRBL, Ramkrishna Forgings, M M Forgings, Mahamaya Steel Industries, Greenlam Industries and Abbott India.

Stocks signalling weakness ahead
The MACD showed bearish signs on the counters of Coal India, Bharti Airtel, NMDC, Hindustan Petroleum, Delta Corp, InterGlobe Aviation, Hindustan Unilever, Piramal Enterprises, Central Depository, JSW Energy, Colgate Palmolive, PI Industries, Siemens, Ester India, HBL Power Systems, AU Small Finance Bank, Tata Communications, Birla Corporation, Surya Roshni, Prince Pipes & Fittings, Khadim India, Kansai Nerolac Paint, Taj GVK Hotels & Resorts, Linde India, NACL Industries, Apollo Pipes, Kokuyo Camlin, Aries Agro, Poly Medicure, Atul Limited, Speciality Restaurant, Kamat Hotels, Munjal Showa, S P Apparels, Sharda Cropchem, Alkali Metals, Vardhman Textiles, TCNS Clothing, Vishnu Chemicals, The Indian Card Clothing, Bannari Amman Sugars and Welspun Investments.

Wednesday's most active stocks
RIL (Rs 2965.87 crore), Bajaj Finance (Rs 2256.78 crore), Axis Bank (Rs 2154.56 crore), IndusInd Bank (Rs 2081.25 crore), SBI (Rs 1839.87 crore), Bajaj Finserv (Rs 1762.75 crore), HDFC Bank (Rs 1729.10 crore), ICICI Bank (Rs 1645.89 crore), HDFC (Rs 1359.31 crore) and Dr. Reddy's (Rs 1303.90 crore) were among the most active stocks on Dalal Street on Wednesday in value terms.

Wednesday's most active stocks in volume terms
Vodafone Idea (Shares traded: 44.50 crore), YES Bank (Shares traded: 15.75 crore), SITI Networks (Shares traded: 11.25 crore), PNB (Shares traded: 9.96 crore), Bank of Baroda (Shares traded: 9.56 crore), ONGC (Shares traded: 8.70 crore), Tata Power (Shares traded: 7.59 crore), SBI (Shares traded: 7.48 crore), Federal Bank (Shares traded: 6.22 crore) and Tata Motors (Shares traded: 5.44 crore) were among the most traded stocks in the session.

Stocks showing buying interest
Tanla Solutions, Emami, CAMS, Tata Power and Adani Ports SEZ witnessed strong buying interest from market participants as they scaled their fresh 52-week highs on Wednesday, signalling bullish sentiment.

Stocks seeing selling pressure
Dangee Dums; Jump Networks; Lakshmi Vilas Bank; Standard Industries; Vishal Fabrics witnessed strong selling pressure in Wednesday’s session and hit their 52-week lows, signalling bearish sentiment on these counters.

Sentiment meter favours the bears
Overall, market breadth remained in favour of bears. As many as 124 stocks on the BSE 500 index settled the day in green, while 371 settled the day in red.

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Euphoria on the D-street fizzled out as benchmark equity indices plunged heavily in the afternoon after testing new highs in early trade with investors losing Rs 2 lakh crore, amid a mixed trend in global stocks. Market barometer Sensex tumbled 695 points to close at 43,828 points, while peer Nifty shed 197 points to close at 12,858. We spoke to Mayuresh Joshi, Head- Equity Research, William O'Neil India, to understand his views on what lies ahead for the market.