Ahead of Market: 10 things that will decide D-Street action on Friday

Equity benchmarks surrendered early gains to finish in the red for the third session on the trot on Thursday as hawkish comments from RBI and the Covid surge in China kept buying sentiment in check despite largely positive global market trends.

After a gap-up opening, the 30-share BSE Sensex buckled under selling pressure as the session progressed and finally closed 241 points lower at 60,826.22. During the day, it tumbled 430 points to 60,637.24. On similar lines, the broader NSE Nifty dropped 72 points to settle at 18,127.35. Among Nifty sectoral indices, all the indices ended in the red, with the most cut seen in the Nifty Realty index followed by Nifty PSU Bank and Nifty Metal.

Here's how analysts read the market pulse:
“Nifty opened gap up near its key hourly moving averages only to attract fresh round of selling. As the day progressed, the index breached the lower end of a downward sloping channel. On the downside, it has tested a rising trendline drawn from the June 2022 low & closed above it. Thus the index is trading near a very crucial support of 18,000. Till that level holds on a closing basis there is scope for some recovery. However breach of 18,000 on a closing basis will intensify the selling pressure,” Gaurav Ratnaparkhi, Head of Technical Research, Sharekhan by BNP Paribas, said.

“Indian equities have continued to remain weak as the Nifty slipped below the 50 EMA on the daily timeframe. On the lower end, the index has found support around 18,070 before closing a bit higher. On the higher end, 18350 may act as critical support, and the market may remain sell-on-rise till Nifty remains below 18350–18500. On the lower end, a decisive fall below 18070 may trigger selling pressure in the market,” Rupak De, Senior Technical Analyst at LKP Securities.

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

US market
Wall Street's main indexes dropped on Thursday after fresh data underscored strength in the US economy and aggravated concerns over the Federal Reserve's continued policy tightening. Losses in rate-sensitive megacap growth stocks such as Apple Inc, Microsoft Corp and Amazon.com Inc pulled technology and consumer discretionary shares lower. The final estimate of third-quarter U.S. GDP revealed gross domestic product increased at a 3.2% annualized rate, above the previous estimate of 2.9%. At 9:50 a.m. ET, the Dow Jones Industrial Average was down 331.19 points, or 0.99%, at 33,045.29, the S&P 500 was down 50.70 points, or 1.31%, at 3,827.74, and the Nasdaq Composite was down 197.23 points, or 1.84%, at 10,512.14.

Micron Technology Inc slipped 3.2% after the chipmaker forecast a bigger-than-expected second-quarter loss, sparking declines in peers.

European shares
European shares rose for a second straight session on Thursday, boosted by financial and energy stocks, as investors cheered improving consumer sentiment in the United States after inflation expectations eased. The region-wide STOXX 600 index was up 0.4% at a one-week high, taking cues from an upbeat session on Wall Street overnight. The STOXX 600 has fallen about 11% so far in 2022, but it has still outperformed the benchmark U.S. S&P 500 index , which has declined 18.6% and is on track for its worst yearly performance since 2008.

Tech View: Long negative candle
A long negative candle was formed on the daily chart, which indicates a downtrend continuation pattern amidst range movement. We observe overlapping candles over the last few sessions which reflects markets inability to sustain the gains.

Stocks showing bullish bias
Momentum indicator Moving Average Convergence Divergence (MACD) showed bullish trade on the counters of Wockhardt, Jubilant Foodworks, Vijaya Diagnostics, among others. 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 Yes Bank, Central Bank, Shree Renuka Sugars, RBL Bank and Bandhan Bank, 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 1,116 crore), PNB (Rs 1,039 crore), Infosys (Rs 959 crore) and RIL (Rs 888 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: 38.76 crore), Suzlon Energy (Shares traded: 37.76 crore), PNB (Shares traded: 19.37 crore), and IOB (Shares traded: 14.9 crore) were among the most traded stocks in the session on NSE.

Stocks showing buying interest
Shares of Jyothy Labs and Abbott India witnessed strong buying interest from market participants as they scaled their fresh 52-week highs, signaling bullish sentiment.

Stocks seeing selling pressure
Shares of Tata Tele, Quess Corp, Lux, Borosil Renewables and Sheela Foam, among others, hit their 52-week lows on Tuesday, which signals bearish sentiment on the counter.

Sentiment meter favours bears
Overall, market breadth favoured bears as 765 stocks ended in the green, while 2,792 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)