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

Ahead of the crucial Union Budget 2023 lined up next week, Indian equity indices tumbled sharply in Friday’s trade, with Nifty dropping to 17,600 levels, down 1.6%. Pre-budget nervousness, rise in the sovereign bond yield as well as Hindenburg report on Adani Group continued to weigh on the D-Street. Among sectoral indices, all indices barring Auto, FMCG and Pharma ended in the red.


Here's how analysts read the market pulse:

“After three weeks of good consolidation, Nifty index has given a major range breakdown. With good volumes, Nifty has broken down from the 18200- 17800 levels, indicating that bears are in control. Around 17550, Nifty took a minor support at its 200 EMA. To resume its upward rally, Nifty needs to close above 17750 - 17800; until then, this could be a sell on every rise opportunity in the Index,” Ameya Ranadive, Equity Research Analyst, Choice Broking.


“The sharp slump in the Indian market was triggered by an unfavourable research report on Asia’s richest promoter group companies. This is also affecting the banking stocks even though the results of the sector are optimistic due to high group lending, indicating potential risk. PSU banks are the most impacted compared to private banks owing to high exposure. The FIIs' cautious stance ahead of the Union Budget and FOMC meetings also fuelled the collapse,” Vinod Nair, Head of Research at Geojit Financial Services, said.

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


US markets advance
Wall Street advanced on Friday, marking the end of an rocky week in which economic data and corporate earnings guidance hinted at softening demand but also economic resiliency ahead of next week's Federal Reserve monetary policy meeting. All three major US stock indexes ended the session green, with the Nasdaq, powered by megacap momentum stocks, enjoying the biggest gain. From last Friday's close, the S&P and the Dow posted their third weekly gains in four, while the tech-laden Nasdaq notched its fourth straight weekly advance.


European shares end higher
European markets finished higher on Friday with shares in Germany leading the region. The DAX is up 0.11% while London's FTSE 100 is up 0.05% and France's CAC 40 is up 0.02%. The pan-European Stoxx 600 index closed 0.3% higher. Autos gained 1.1% as mining and food and beverage stocks fell 0.6%. The FTSE 100 blue-chip index closed Friday up 0.05% lifted by upbeat oil-linked stocks, which offset a drag on the mining sector as the central bank meetings scheduled next week prompted caution among investors.

Tech View: Long bear candle
Nifty on Friday formed a long bear candle on the daily chart, indicating a decisive downside breakout of the sideways range movement in the market at 17800 levels.

Nifty was trading in a range of 18250 to 17750 levels over the last one month and the market action of the last two sessions opens the potential downside pattern target of around 17200-17300 levels in the near term, chart readers said.

Stocks showing bullish bias
Momentum indicator Moving Average Convergence Divergence (MACD) showed bullish trade on the counters of Ashok Leyland, Varun Beverages, Supreme Industries, Jyothy Labs and Unichem Labs among others.

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 signaling weakness ahead
The MACD showed bearish signs on the counters of SAIL, ONGC, IOC, L&T and Hindustan Zinc among others. Bearish crossover on the MACD on these counters indicated that they have just begun their downward journey.

Most active stocks in value terms
Adani Enterprises (Rs 4444 crore), Adani Ports (Rs 3955 crore), Ambuja Cements (Rs 3571 crore) and ICICI Bank (Rs 3271 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
Yes Bank (Shares traded: 18.63crore), Zomato (Shares traded: 16.9 crore), Vodafone Idea (Shares traded: 14.03 crore), PNB (Shares traded: 11.12 crore) and Suzlon Energy (Shares traded: 9.67 crore) were among the most traded stocks in the session on NSE.

Stocks showing buying interest
Shares of Archean Chemical and Bombay Super Hybrid Seeds witnessed strong buying interest from market participants as they scaled their fresh 52-week highs, signaling bullish sentiment.

Stocks seeing selling pressure
Shares of Adani Green Energy, Dixon Technologies, Indus Towers, Adani Ports and ACC among others hit their 52-week lows, signaling bearish sentiment on the counters.

Sentiment meter favours bears
Overall, market breadth favoured bears as 2,671 stocks ended in the red while 887 names settled with gains.

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