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

Domestic equities continued their positive move in the absence of any major global cues to close at a record high for the second consecutive day on Friday. The BSE Sensex ended 21 points higher at 62,294, while its broader peer Nifty 50 ended above the 18,550 level.

Here's how analysts read the market pulse:
“Based on the price chart and momentum indicator setup we can infer that the index is on the verge of strong directional movement over the short term. On the lower end, a fall below 18,450 may trigger a correction towards 18,100-18,000; whereas, on the higher end, a rise above 18,605 may induce a decent rally in the market,” Rupak De, Senior Technical Analyst at LKP Securities said.

“The underlying trend of Nifty continues to be positive. Having surpassed the crucial upper resistance in this week, the Nifty is expected to move into new all-time highs (above 18606 levels) by next week. A sustainable move above 18,600 levels is likely to pull Nifty towards the new milestone of 18,950 levels in the near term (which is 0.786% Fibonacci extension taken from the June 22 bottom, Sept 22 top and Sept 22 higher bottom, as per weekly chart)” Nagaraj Shetti, Technical Research Analyst at HDFC Securities said.

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

Nasdaq, S&P 500 end down, Dow up
The Nasdaq closed lower on Friday with pressure from Apple Inc (AAPL.O) in a subdued holiday-shortened trading session for Wall Street, as investors watched Black Friday sales and COVID-19 cases in China. Apple fell 2.0% on news of reduced iPhone shipments from a Foxconn plant in China in November as production was hit by COVID-related worker unrest.US retail stocks have become a barometer of consumer confidence as inflation bites. The Dow Jones Industrial Average rose 152.97 points, or 0.45%, to 34,347.03; the S&P 500 lost 1.14 points, or 0.03%, at 4,026.12; and the Nasdaq Composite dropped 58.96 points, or 0.52%, to 11,226.36.

European shares
Europe's STOXX 600 index closed flat on Friday, for its sixth straight weekly gain, as hopes of slowing interest rate hikes offset a real estate sector sell-off and retailers were hurt by fears of a bumpy holiday shopping season. The pan-European stock index hit a more than three-month high earlier this week. The FTSE 100 rose on Friday helped by gains in energy shares while the domestically-focused midcap index was subdued amid concerns about a gloomy holiday season as a cost-of-living crisis worsens.

Tech View: Small negative candle
Headline equity index Nifty today formed a small negative candle with a minor lower shadow on the daily charts and a bullish engulfing pattern on the weekly chart. Now, the index has to hold above 18,500 zone for an up move towards 18,600-18881 zone, whereas supports are placed at 18,442 -18,250 zone, said Chandan Taparia of Motilal Oswal.

As reflected by the fear gauge index India VIX, volatility has been cooling off from the last nine weeks and supporting the bulls to hold at higher zones. The momentum indicator has reached the falling trendline on the daily timeframe.

Stocks showing bullish bias
Momentum indicator Moving Average Convergence Divergence (MACD) showed bullish trade setup on the counters of REC, Can Fin Homes, Godrej Industries, PVR, Inox Leisure and Brightcom Group 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 Indiabulls Real Estate, Hero MotoCorp, Adani Ports, Hindustan Zinc, Aavas Financiers and JK Paper 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 976 crore), ICICI Bank (Rs 916 crore), RIL (Rs 884 crore), Tata Motors (Rs 808 crore), Infosys (Rs 743 crore), HDFC Bank (Rs 681 crore) and Axis Bank (Rs 675 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: 2.7 crore), Tata Motors (Shares traded: 1.9 crore), NTPC (Shares traded: 1.2 crore), Coal India (Shares traded: 1 crore), SBI (Shares traded: 1 crore), ICICI Bank (Shares traded: 98 lakh) and ONGC (Shares traded: 98 lakh) were among the most traded stocks in the session on NSE.

Stocks showing buying interest
Shares of BHEL, Rail Vikas Nigam, Power Finance Corporation, REC, PNB, Escorts and Ceat witnessed strong buying interest from market participants as they scaled their fresh 52-week highs, signaling bullish sentiment.

Stocks seeing selling pressure
Shares of Motilal Oswal and Quess Corp witnessed strong selling pressure and hit their 52-week lows, signaling bearish sentiment on the counters.

Sentiment meter favours bulls
Overall, market breadth favoured bulls as 2,044 stocks ended in the green, while 1,473 names settled with cuts.

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