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

As Nifty closed above the 11,000 level on Monday, it extended the recent run beyond the 200-day SMA for the second day running. The Put-Call Ratio has moved past the 1.80 mark, which shows the market is clearly overbought for the near term. India VIX rose marginally by 2.30 per cent to 24.7125. Regardless of the situation whether the market extends its up-move or not, the current technical setup has become extremely skewed in terms of risk reward.

Deepak Jasani of HDFC Securities said technically, Nifty remains in a short-term uptrend. “Further upsides are likely once the immediate resistance of 11,038 is taken out. The crucial support to watch out for any weakness is at 10,953,” he said.

Gaurav Ratnaparkhi of Sharekhan by BNP Paribas said going ahead, the 20-month moving average i.e. 11,090 will be a key hurdle to watch out for. “Overall, Nifty is set to test its weekly upper Bollinger Band, which is near 11,280. On the flip side, the 10,950-10,930 range will act as a near-term support for any minor degree dip,” he said.

That said, here’s a look at what some of the key indicators are suggesting for Tuesday’s market action:
US stocks gain on COVID-19 vaccine, stimulus hopes
Stock indexes are wavering between small gains and losses on Wall Street as the market sheds some of its gains from last week. The Dow Jones Industrial Average fell 129 points, or 0.5%, to 26,545, while the Nasdaq composite added 0.8% and the Russell 2000 index of small company stocks gave up 0.6%.

European stocks slip as EU talks in focus
European shares fell on Monday, dragged down by cyclical sectors amid a surge in coronavirus cases globally, while investors remained cautiously optimistic about the ongoing talks over an EU-wide recovery fund. An index of eurozone shares slipped 0.3%, with the euro jumping to a four-month high. The broader European equities index also fell 0.3%, while Asian markets remained subdued as coronavirus cases increased in many countries.

Tech View: Nifty overbought on daily chart
Nifty50 reclaimed the psychologically important 11,000 mark on Monday. In the process, the index formed a small bullish candle on the daily chart, with a long lower wick, suggesting that the intraday cut in gains were bought into by the end. However, Nifty looked overbought on the daily chart. Weekly and monthly charts suggested the chance of a turnaround, said analysts, who believe the 20-month moving average at 11,090 is likely to pose an immediate hurdle for the index.

Check out the candlestick formations in the latest trading sessions

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F&O: Lower VIX level suggests bullish setup
India VIX moved up 2.29 per cent to 24.71 level. However, overall lower volatility rules out major decline and suggests a bullish market stance. Options data suggested an immediate trading range between 10,700 and 11,200 levels.

Stocks showing bullish bias
Momentum indicator Moving Average Convergence Divergence (MACD) on Monday showed bullish trade setup on the counters of Reliance Industries, HPCL, Voltas, Marksans Pharma, Muthoot Finance, Quick Heal Technologies, PTC India Financial, Central Depository, JM Financial, Asian Paints, Hero MotoCorp, Tata Steel BSL, Gujarat Mineral Development, Man Industries, Bajaj Electricals, FDC, Radico Khaitan, VIP Industries, Crompton Greaves, ICICI Lombard, Jubilant Foodworks, Kopran, Gravita India and Thomas Cook (I), among others.

Stocks signalling weakness ahead
The MACD showed bearish signs on the counters of Hindustan Copper, IRB Infrastructure, Hexaware Technologies, Century Plyboards, Kalpataru Power, NIIT, Natco Pharma, Balaji Amines, Apollo Micro Systems, Allcargo Logistics, Prakash Pipes, India Glycols, Srikalahasthi Pipes, Motilal Oswal Finance, BF Investment, Harrisons, Nucleus Software, Ramco Industries, Fairchem Speciality, Dhunseri Tea & Industries, Intense Technologies, Hindustan Composites, Lakshmi Finance, Zodiac JRD MKJ, The Indian Card Clot, Foseco India and Zenith Exports. Bearish crossover on the MACD on these counters indicated that they have just begun their downward journey.

Most active stocks in value terms
HDFC Bank (Rs 3706.17 crore) , Bajaj Finance (Rs 3575.31 crore) , RIL (Rs 3235.70 crore) , M&M Financial (Rs 2820.59 crore) , Infosys (Rs 1697.27 crore) , Britannia Inds. (Rs 1486.83 crore) , Axis Bank (Rs 1322.90 crore) , ICICI Bank (Rs 1317.00 crore) , IndusInd Bank (Rs 1057.30 crore) and Vodafone Idea (Rs 967.17 crore) were among the most active stocks on Dalal Street on Monday 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
Vodafone Idea (shares traded: 103.22 crore) , M&M Financial (shares traded: 12.69 crore) , Uttam Value Steel (shares traded: 5.65 crore) , IDFC First Bank (shares traded: 4.75 crore) , SBI (shares traded: 4.57 crore) , Federal Bank (shares traded: 4.24 crore) , Future Consumer (shares traded: 4.02 crore) , Tata Motors (shares traded: 3.98 crore) , YES Bank (shares traded: 3.67 crore) and ICICI Bank (shares traded: 3.63 crore) were among the most traded stocks in the session.

Stocks seeing buying interest
Den Networks, MCX India, Suven Pharma , Jubilant Life and Info Edge witnessed strong buying interest from market participants as they scaled their fresh 52-week highs on Monday signalling bullish sentiment.

Stocks seeing selling pressure
Aarti Surfactants, B.C. Power Controls and Mittal Life Style witnessed strong selling pressure in Monday’s session and hit their 52-week lows, signalling bearish sentiment on these counters.

Sentiment meter favours bulls
Overall, market breadth remained in favour of bulls. As many as 309 stocks on the BSE 500 index settled the day in green, while 190 settled the day in red.

Podcast: Will history repeat for Nifty? >>>

History suggests whenever Nifty has crossed the 11,000 mark, the 11,100 level acted as a trend decision level for the market. Since January 2018, Nifty has taken a pause multiple times around this mark. Will history repeat itself now?