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

NEW DELHI: Nifty50 formed a small-bodied green candle on the daily chart on Thursday, which is similar to a 'Doji' type candle pattern. Analysts said a reversal in trend or downward correction cannot be ruled out after hitting fresh highs.

Here's how analysts read the market pulse:

Mazhar Mohammad at Chartviewindia.in said it is critical for the Nifty to sustain above 16,210 to retain positive bias. "Some strength on the upside can be expected into the zone of 16,400-16,450 if bulls manage to push the index beyond 16,349,” he said.

Shrikant Chouhan, EVP - Equity Technical Research at Kotak Securities said some profit booking at higher levels near 16,350-16,375 resistance levels cannot be ruled out. “Trade setup suggests that the ideal strategy would be to add long positions near crucial supports," he said.

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

Wall Street edges higher
US stock indexes rose on Thursday after data showed fewer Americans filed for unemployment benefits last week, while a decline in shares of online broker Robinhood capped gains on the Nasdaq. At 9:49 a.m. ET, the Dow Jones Industrial Average was up 121.96 points, or 0.35 per cent, at 34,914.63, the S&P 500 was up 12.28 points, or 0.28 per cent, at 4,414.94 and the Nasdaq Composite was up 47.91 points, or 0.32 per cent, at 14,828.44.

European shares end at record highs
European stocks ended at record highs on Thursday, as strong results from Novo Nordisk and Siemens helped outweigh weak mining stocks and losses in major German retailers whose earnings were hurt by COVID-related disruptions. The pan-European STOXX 600 ended 0.4% higher at a record high of 469.96 points, its fourth consecutive peak this week.

Tech View: Some profit-taking likely
Nifty witnessed high volatility near its new all-time high at 16,349 on Thursday and finally closed the day 35 points higher amid a zigzag movement. Despite a positive close, overall the market was skewed in favour of the bears for the second session in a row, hinting that broader market participants are considering this rally only as an opportunity to pare off their existing holdings. In the next session, it would be critical for Nifty to sustain above 16,210 level to retain its positive bias, as any breach of this can attract selling pressure on an intraday basis with initial targets placed around 16,147 level.

F&O: VIX falls below 13 level
India VIX fell 2.55 per cent from 13.21 to 12.87 level. Stability in volatility indicates that the bulls are holding the market to cheer the fresh momentum. Options data suggests a broader trading range between 16,000 and 16,500 levels.

Stocks showing bullish bias
Momentum indicator Moving Average Convergence Divergence (MACD) showed bullish trade setup on the counters of HDFC Bank, Bandhan Bank, Jain Irrigation, L&T Finance Holdings, Hikal, Sonata Software, Au Small Finance Bank, City Union Bank, Panacea Biotec, Lupin, Bajaj Auto, Hero MotoCorp, Hexa Tradex, HDFC AMC, Borosil, Info Edge (India), Intrasoft Technologies, AstraZeneca Pharma, HB Stockholding and GRP.

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 Edelweiss Financial Services, Nava Bharat Ventures, Orient Green Power, Tata Coffee, Kesoram Industries, Fortis Healthcare, NIIT, Balrampur Chini, Nippon Life AMC, Max Healthcare, Welspun India, Religare Enterprises, Moksh Ornaments, Max Financial Services, Va Tech Wabag, Divi's Lab, Minda Industries, Jagran Prakashan, Shoppers Stop, Ashiana Housing, Manaksia Steels, Ajanta Pharma, Matrimony.com, Capri Global Capital, Torrent Pharma, TeamLease Services and Bombay Super Hybrid. A 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 4,282.89 crore), SBI (Rs 2,621.21 crore), Tata Steel (Rs 2,300.41 crore), RIL (Rs 2,086.36 crore), HDFC Bank (Rs 1,395.93 crore), ICICI Bank (Rs 1,253.91 crore), SAIL (Rs 1,200.69 crore), Vodafone Idea (Rs 1,153.20 crore), Kotak Bank (Rs 1,074.57 crore) and HDFC (Rs 1,071.20 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
Vodafone Idea (Shares traded: 214.75 crore), IDFC First Bank (Shares traded: 9.91 crore), SAIL (Shares traded: 8.58 crore), YES Bank (Shares traded: 8.35 crore), Suzlon Energy (Shares traded: 7.23 crore), Bharti Airtel (Shares traded: 7.11 crore), PNB (Shares traded: 6.22 crore), SBI (Shares traded: 5.86 crore), BHEL (Shares traded: 5.79 crore) and JP Power (Shares traded: 5.00 crore) were among the most traded stocks in the session.

Stocks showing buying interest
Hikal, Sun Pharma Advanced Research, NALCO, Tech Mahindra and Rossari Biotech witnessed strong buying interest from market participants as they scaled their fresh 52-week highs, signalling bullish sentiment.

Stocks seeing selling pressure
Andrew Yule & Company, Grauer & Weil (India), India Pesticides, Kovai Medical Center and Hospital, Sligo Retail, Suryoday Small Finance Bank and Vodafone Idea witnessed strong selling pressure and hit their 52-week lows, signalling bearish sentiment on these counters.

Sentiment meter favours bears
Overall, the market breadth remained in favour of the bears. As many as 190 stocks on the BSE500 index settled the day in the green, while 308 settled the day in the red.

Podcast: Is the party in midcaps & smallcaps over?

While the market has hit fresh record highs in the past few days, the broader market seems to be underperforming. Is the party in midcaps and smallcaps over? Will Nifty, too, see some profit booking in the coming days? What do the technical charts suggest?