Ahead of Market: 10 things that will decide stock action on Monday

The Sensex after touching 60,000-level in early trade, pared off some of the early gains and ended higher by 105 points in trade on Friday. Sectorally, the IT pack led the gains with a run-up of over 2 per cent.

Here's how analysts read the market pulse:

Amol Athawale, Deputy Vice President - Technical Research, Kotak Securities Ltd said, "Although the market pared gains, the Sensex hitting the psychological 60,000-mark intra-day signifies investors' faith in the domestic economy. While stock markets may look a bit pricey, India's long-term growth potential does bring some stability at a time when economic slowdown in key economies are staring at recession fears”. On breaching 18,000 Nifty is seen to climb to 18,3000 levels while it shall find support at 17800 and 17600 levels”, he adds.

Vinod Nair, Head of Research at Geojit Financial Services said, “The direction of the market in the week ahead will be determined by cues from the global markets as well as important macroeconomic data points, such as inflation and manufacturing & industrial production data, to be released next week. Domestic retail inflation is expected to rise to 6.9% in August from 6.71% in July."

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

US Stocks Rally
US stocks rallied Friday as Wall Street caps off a strong weekly performance, recovering from a Federal Reserve-induced slump. The Dow Jones Industrial Average gained 377.19 points, or about 1.19% to 32,151.71. The S&P 500 jumped 1.53% to 4,067.36, and the Nasdaq Composite climbed 2.11% to 12,112.31.

European Shares Close Higher
European markets closed higher Friday, as investors reacted to a record rate hike by the European Central Bank and further comments from Federal Reserve Chair Jerome Powell. The pan-European Stoxx 600 provisionally ended up 1.6%, with all sectors and major bourses in positive territory. Mining stocks were 3.2% higher to lead gains, while tech stocks were up 2.7%.

Tech View: Bearish candle on the daily scale
On Friday, Nifty50 index ended above 17,800 for the first time in eight months.Nevertheless, it formed a bearish candle on the daily scale. On weekly charts, the NSE barometer formed a bullish candle for the second consecutive week.

Stocks showing bullish bias
Momentum indicator Moving Average Convergence Divergence (MACD) showed bullish trade setup for scrips such as Nazara Technologies, Gujarat StatePetronet, Max Healthcare,Axis Bank, Indian Energy Exchange and Birlasoft

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 signalling weakness ahead
The MACD showed bearish signs on the counters of Canara Bank, Titagarh Wagons, Jubilant Foodworks, KRBL and Aptus Value Housing.

Bearish crossover on the MACD on these counters indicated that they have just begun their downward journey.

Most active stocks in value terms
Adani Ports (Rs 1,513 crore),Ambuja Cements (Rs 1,155 crore), Shree Cements (Rs 939 crore), HDFC Bank (Rs 892 crore), SBI (Rs 851 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
Tata Steel (Shares traded: 3.75 crore), Adani Ports SEZ (Shares traded: 1.66 crore), SBI (Shares traded: 1.54 crore), NTPC (Shares traded: 1.36 crore) and Tata Motors (Shares traded: 1.15 crore) were among the most traded stocks in the session on NSE.

Stocks showing buying interest
Shares of Adani Ports SEZ, SBI, ITC, ICICI Bank and M&M witnessed strong buying interest from market participants as they scaled their fresh 52-week highs, signaling bullish sentiment.

Stocks seeing selling pressure
Shares of Natco Pharma witnessed strong selling pressure and hit its 52-week low, signaling bearish sentiment on the counters.

Sentiment meter favours bears
Overall, market breadth favoured bears as 1,798 stocks registered decline, whereas 1,658 stocks witnessed gains.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)