The daily chart signals a capped upside going forward. Nifty has formed an indecisive pattern similar to that of Doji candles in the last five out of six sessions, suggesting that the rally is losing momentum.
According to Nagaraj Shetti, Technical Research Analyst, HDFC Securities, the short-term trend of Nifty continues to be rangebound within a high low band of 13,600-13,400 levels. He added, “A sustainable move above 13,600 levels is expected to result in Nifty continuing with next round of sharp upside momentum and inch towards the next upside levels of 13,900 in the near term.”
“The Indian market opened with a negative trend, following weak sentiments in Asian markets, but a strong recovery happened as the European market opened positively ahead of the Fed and the ECB policy meetings. The outcome of these meetings are expected to be positive, triggering further positivity in the market,” said Vinod Nair, Head of Research at Geojit Financial Services.
That said, here’s a look at what some of the key indicators are suggesting for Wednesday’s action:
US stocks gain on stimulus hopes
US stock indexes rose on Tuesday as progress toward a massive government spending bill and COVID-19 relief measures kept spirits high, while investors awaited new economic cues from the Federal Reserve’s final meeting of the year. The Dow Jones Industrial Average was up 133.99 points, or 0.45%, at 29,995.54, the S&P 500 was up 26.03 points, or 0.71%, at 3,673.52. The Nasdaq Composite was up 105.53 points, or 0.85%, at 12,545.57.
European shares rise on vaccine optimism
European shares rose on Tuesday, with optimism from vaccine roll-outs helping investors shake off nervous early trades as rising COVID-19 cases result in tighter curbs across the continent. Vaccination drive in the United States, the latest Western country after the UK, boosted sentiment, lifting the pan-European STOXX 600 index. However, the index erased losses and was trading flat.
Tech View: Nifty bulls defending support
Nifty50 on Tuesday tested its immediate support range at 13,450-470, before recovering and closing in the black. With this, the index formed an indecisive Doji candle on the daily chart for the fourth consecutive day. The bulls seem to be defending the support levels rigorously, but the upside seems limited, analysts said. “The bulls are constantly protecting the 13,400-13,450 zone in intraday declines. On the upside, the bears are protecting the 13,550-13,600 zone. Moreover, multiple Doji and Hanging Man candlestick patterns on the daily chart suggest lack of momentum in the uptrend. A trade below 13,400 level may trigger sharp corrections in Nifty to 13,200-13,100 levels. The RSI is also suggesting lack of momentum on the upside,” said Aditya Agarwala, Senior Technical Analyst at YES Securities.
Check out the candlestick formations in the latest trading sessions
ETMarkets.com
F&O: Falling VIX a positive sign
India VIX fell marginally by 0.28 per cent from 19.40 to 19.34 level. The overall lower volatility suggests the bulls are holding a tight grip on the market and every small decline is being bought into. On the options front, maximum Put open interest stood at 13,000 level followed by 13,200, while maximum Call OI was at 13,000 followed by 13,500 levels. Marginal Call writing was seen at 13,900 and then 13,700 levels while there was Put writing at 13,000 and then 13,300 levels. Options data suggested an immediate trading range between 13,300 and 13,750 levels.
Stocks showing bullish bias
Momentum indicator Moving Average Convergence Divergence (MACD) on Tuesday showed bullish trade setup on the counters of Jindal Steel, HPCL, Usha Martin, Pricol, Nelcast, KEI Industries, Jagsonpal Pharma, Rupa & Company, GP Petroleums, Sanco Industries, Mahindra Logistics, Cigniti Technologies, Clariant Chemicals, Linde India, Affle (India), Jullundur Motor, Sanofi India, G M Breweries, Mindteck (India), Lakshmi Machines and Sandesh among others.
Stocks signalling weakness ahead
The MACD showed bearish signs on the counters of IRCTC, Indian Hotels, Bombay Dyeing, ICICI Lombard, Century Textiles, Orient Cement, Central Depository, Jubilant Foodworks, Siemens, HCL Infosystem, Sun Pharma Advanced, Endurance Technologies, Strides Pharma, Refex Industries, Varroc Engineering, Century Plyboards, Indoco Remedies, PNC Infratech, Westlife Development, Sunteck Realty, GTPL Hathway, Indostar Capital, Bajaj Electricals, Uflex, IZMO, Prataap Snacks, Ruby Mills, Eimco Elecon, Bharat Rasayan and ICRA among others.
Tuesday’s most active stocks
Bajaj Finance (Rs 2985.56 crore), RIL (Rs 1688.94 crore), HDFC Bank (Rs 1488.02 crore), ICICI Bank (Rs 1393.98 crore), Axis Bank (Rs 1353.10 crore), HDFC (Rs 1179.01 crore), ZEEL (Rs 1067.10 crore), Majesco L (Rs 1051.41 crore), Canara Bank (Rs 1044.64 crore) and Bajaj Finserv (Rs 1027.50 crore) were among the most active stocks on Dalal Street on Tuesday in value terms.
Tuesday’s most active stocks in volume terms
YES Bank (shares traded: 44.65 crore), Vodafone Idea (shares traded: 14.05 crore), RattanIndia Power (shares traded: 12.06 crore), Canara Bank (shares traded: 8.72 crore), GTL Infra (shares traded: 6.95 crore), Burger King India (shares traded: 6.00 crore), PNB (shares traded: 5.69 crore), HCC (shares traded: 5.22 crore), NTPC (shares traded: 5.22 crore) and Reliance Communications (shares traded: 5.18 crore) were among the most traded stocks in the session.
Stocks seeing buying interest
Galaxy Surfactants, GMR Infra, Havells India, Bajaj Finance and CG Consumer witnessed strong buying interest from market participants as they scaled their fresh 52-week highs on Tuesday signalling bullish sentiment.
Stocks seeing selling pressure
Rudrabhishek Enterprises, Shree Ram Proteins and Vishal Fabrics witnessed strong selling pressure and hit their 52-week lows, signalling bearish sentiment on these counters.
Sentiment meter favours bears
Overall, market breadth remained in favour of bears. As many as 217 stocks on the BSE 500 index settled the day in green, while 283 settled the day in red.
Podcast: Should you buy Majesco shares just for the dividend? >>>
Gains in HDFC twins offset profit booking in FMCG stocks as the benchmark indices ended flat but at record closing highs. Both Sensex and Nifty ended the day with a minor gain of 10 points each. We spoke to Ajit Mishra of Religare Broking to understand the available investment opportunity in Majesco.
