Aditya Agarwala, senior technical analyst – institutional equities, YES Securities said “A sustained trade above 13,950-13,975 will extend the gains, taking the 50-pack higher to the levels of 14,050-14,150, which happens to be the upper end of a crucial rising channel formed, joining major highs and lows post the March selloff.” He sees support for the index at 13,850.
“Finance stocks were the major contributors in the upside, but broader markets underperformed the main benchmark. Selling was seen in auto, pharma and metal sectors among others. A major part of the global developments like stimulus and Brexit deal are priced in the market. In the absence of major domestic or global events expected in the near-term, the market will focus on the upcoming Q3 earnings and stock-specific updates,” 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 vaccine optimism
Wall Street’s main indexes gained on Tuesday as bets that fiscal aid will speed up a vaccine-led recovery in the economy boosted sentiment in the final days of the year. The Dow Jones Industrial Average rose 28.1 points, or 0.09%, at 30,432.57. The S&P 500 rose 2.25 points, or 0.06%, to 3,737.61, while the Nasdaq Composite rose 18.89 points, or 0.15%, to 12,857.75.
European shares rise as Brexit deal boosts UK markets
European stocks extended their year-end rally on Tuesday as a Brexit trade deal, hopes of an expanded U.S. stimulus package and euro zone’s marathon COVID-19 vaccination campaign brightened prospects for global growth in 2021. The pan-European STOXX 600 was up 0.67%, rising for a fifth straight session and scaling a new 10-month high. UK stocks outperformed, with the blue-chip FTSE 100 jumping 1.92% in its first day of trading after the sealing of a Brexit trade agreement between Britain and the European Union on Thursday.
Tech View: Nifty forms indecisive Doji
Nifty50 on Tuesday climbed for the fifth session in a row and topped the 13,900 level. But the index formed an indecisive Doji on the daily chart, though it continued to make higher highs and lows for the fourth straight session. During the day, the advance-decline ratio remained flat, hinting at a cautious approach in the broader market, said Mazhar Mohammad of Chartviewindia.in. “A few momentum oscillators on the daily and weekly charts have reached the overbought levels, signalling a stretched rally. It is critical for the index to sustain above the 13,859 mark, a breach of which can attract intraday selling pressure. If the bulls manage to push the index beyond the 14,000 mark, the rally can extend up to 14,200 level,” Mohammad said, asking traders to remain fence-sitters.
Check out the candlestick formations in the latest trading sessions
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F&O: drop in volatility supporting bullish setup
India VIX moved up 1.76% from 20.42 to 20.79 levels. A drop in volatility is supporting the bullish market setup and VIX needs to hold below 19 mark to help the bulls continue their grip on the market. There was Call writing at 14,300 and then 14,100 levels, and Put writing at 13,900 and 13,800 levels. Options data suggested an immediate trading range between 13,700 and 14,200 levels.
Stocks showing bullish bias
Momentum indicator Moving Average Convergence Divergence (MACD) on Tuesday showed bullish trade setup on the counters of Steel Authority, MMTC, Nava Bharat Ventures, Fineotex Chemical, JSW Steel, Sun Pharma, Indiabulls Real Estate, FACT, Adani Enterprises, Tech Mahindra, Gujarat Pipavav Port, HDFC Life Insurance, UPL, Meghmani Organics, Godrej Consumer Products, MSTC, HSIL, Aditya Birla Fashion, SORIL Infra Resource, Deepak Nitrite, Mohota Industries, Kopran, Zuari Global, Commercial Engineers, Bajaj Auto, GIC Housing Finance, Vardhman Acrylics, Can Fin Homes, Kaveri Seed Company, APL Apollo Tubes, Somany Home Innovations, Maan Aluminium, Swan Energy, Heidelberg Cement and STEL Holdings.
Stocks signalling weakness ahead
The MACD showed bearish signs on the counters of Dish TV India, Sun TV Network, Shipping Corporation of India, JK Paper, Jubilant Foodworks, Orient Cement, Nestle India, Bombay Rayon Fashion, Zen Technologies, PSP Projects, Star Paper Mills, Dolat Investment, KIOCL, TCNS Clothing, N R Agarwal Industries, TCI Express, Global Offshore Services, Ganges Securities and TCI Developers.
Tuesday’s most active stocks
IndusInd Bank (Rs 1868.02 crore), RIL (Rs 1711.83 crore), Tata Motors (Rs 1315.89 crore), SBI (Rs 1249.92 crore), HDFC (Rs 1128.81 crore), HDFC Bank (Rs 1035.00 crore), Bajaj Finance (Rs 1025.79 crore), ICICI Bank (Rs 1001.60 crore), Axis Bank (Rs 863.29 crore) and Infosys (Rs 857.24 crore) were among the most active stocks on Dalal Street on Tuesday in value terms.
Tuesday’s most active stocks in volume terms
Vodafone Idea (Shares traded: 29.06 crore), PNB (Shares traded: 16.02 crore), YES Bank (Shares traded: 10.36 crore), Tata Motors (Shares traded: 7.13 crore), RattanIndia Power (Shares traded: 4.93 crore), Snowman Logistics (Shares traded: 4.81 crore), GMR Infra (Shares traded: 4.62 crore), SBI (Shares traded: 4.50 crore), Bank of Baroda (Shares traded: 4.15 crore) and Dish TV India (Shares traded: 3.99 crore) were among the most traded stocks in the session.
Stocks showing buying interest
Rossari Biotech, Sterlite Technologies, CAMS, Vakrangee and Timken India witnessed strong buying interest from market participants as they scaled their fresh 52-week highs on Tuesday signalling bullish sentiment.
Stocks seeing selling pressure
Fairchem Organics, Jump Networks and Ravinder Heights witnessed strong selling pressure in Tuesday’s session 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 207 stocks on the BSE 500 index settled the day in green, while 288 settled the day in red.
Podcast: Will Nifty continue the momentum? >>>
Bulls continued to march ahead with benchmark equity indices rising for the fifth day in a row, to log new all-time highs on Tuesday, with financials leading the gains. Benchmark Sensex rose 259 points to 47,613 points, while peer Nifty climbed 59 points to 13,933 points. With the relentless rise, it is uncertain if the momentum will continue. To discuss what lies ahead for the market, we caught up with Mayuresh Joshi, Head – Equity Research, William O’Neil India.
