Market reacted to the global fear of a rise in inflation, which many fear could trigger a Fed rate hike earlier than anticipated, said Ajit Mishra, VP – Research at Religare Broking.
“Nifty has been struggling to cross the 15,000-mark for the last two months and is witnessing a slide again after almost reaching that level. However, we feel the downside could be capped this time due to the existence of a support around 14,600 zone,” he added.
Mazhar Mohammad of Chartviewindia.in, however, is rather focused on Nifty50 sustaining above the 14,771 level. “A breach of that level can initially drag the index towards its 100-day simple moving average, whose value is placed around the 14,550 level and which has acted as a strong support in the past on a closing basis,” he said.
That said, here’s a look at what some of the key indicators are suggesting for Wednesday’s action:
US shares drop on inflation jitters
Wall Street’s main indexes fell on Tuesday, led by tech-related stocks, as investors feared that rising inflation could push the Federal Reserve to tighten monetary policy faster than expected. At 9:10 pm IST, the Dow Jones Industrial Average was down 479.99 points, or 1.38 per cent, to 34,263.70, the S&P 500 lost 42.14 points, or 1.01 per cent, to 4,146.18 and the Nasdaq Composite lost 65.84 points, or 0.49 per cent, to 13,336.34.
European shares see worst sell-off in 3 weeks
European stocks retreated from all-time highs on Tuesday, with travel, retail and technology shares among the top losers after worries about rising US inflation knocked back US indices. At 9:10 pm, the pan-European STOXX 600 index was down 2.14 per cent and was on course for its biggest percentage decline in three weeks. The main bourses in Frankfurt, Paris and London all lost over 2 per cent.
Tech View: Nifty support seen at 14,770
Nifty50 on Tuesday snapped a four-day winning streak and negated a pattern of higher lows that it was making on the daily charts over the past five sessions. During the day, the index recovered from the opening lows, taking some support at its 50-day moving average. The index ended up forming a bullish candle on the daily chart. Analysts see a near-term hurdle for the index in the 15,000-15,050 zone while support is likely in the 14,770-14,740 zone. Gaurav Ratnaparkhi of Sharekhan said a falling trendline, the daily upper Bollinger Band and a key swing high are all present in the 15,000-15,050 range.
Check out the candlestick formations in the latest trading sessions
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F&O: VIX needs to hold below 20 level
India VIX fell 1.98% from 20.22 to 19.83 level. India VIX needs to hold below 20 level to again attract a bullish stance. On the options front, maximum Put open interest stood at 14,000 level followed by 14,500, while maximum Call OI was seen at 15,000 level followed by 15,500. Call writing was seen at strike prices 15,100 and 15,300, while there was Put writing at 14,500 and 14,400 levels. Options data suggested a wider trading range between 14,500 and 15,200 levels, while the immediate trading range was seen in the 14,700-15,000 zone.
Stocks showing bullish bias
Momentum indicator Moving Average Convergence Divergence (MACD) on Tuesday showed bullish trade setup on the counters of Adani Ports SEZ, RIL, TCS,
, Birlasoft, , Gujarat Pipavav Port, Jyothy Labs, Axiscades Technologies, Birla Corp, Polycab India, HDFC AMC, Federal-Mogul Goetze, Nestle India and Kennametal India.
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 JSW Steel, Morepen Labs, Laurus Labs, Deepak Nitrite, Tejas Networks, Century Textiles, Suven Pharma, Neuland Labs, Thyrocare Tech, Century Plyboards, Balaji Amines, Oriental Aromatics, TV Today Network and Tube Investments. Bearish crossover on the MACD on these counters indicated that they have just begun their downward journey.
Tuesday’s most active stocks in value terms
Tata Steel (Rs 5,005.77 crore), BHEL (Rs 3,632.19 crore), Tata Motors (Rs 1,848.66 crore), SAIL (Rs 1,653.95 crore), SBI (Rs 1,519.82 crore), JSW Steel (Rs 1,206.82 crore), RIL (Rs 1,200.13 crore), Hindalco (Rs 1,138.53 crore), Sun Pharma (Rs 1,049.38 crore) and Coal India (Rs 1,023.76 crore) were among the most active stocks on Dalal Street on Tuesday in value terms.
Tuesday’s most active stocks in volume terms
BHEL (Shares traded: 51.01 crore), PNB (Shares traded: 23.17 crore), Suzlon Energy (Shares traded: 18.96 crore), Reliance Power (Shares traded: 17.30 crore), South Indian Bank (Shares traded: 14.16 crore), YES Bank (Shares traded: 14.16 crore), SAIL (Shares traded: 11.72 crore), Vodafone Idea (Shares traded: 8.60 crore), JP Power (Shares traded: 7.85 crore) and
(Shares traded: 7.69 crore) were among the most traded stocks in the session.
Stocks showing buying interest
Adani Enterprises, Balkrishna Industries, Deepak Fertilizers, Marico, Motherson Sumi Systems, Nureca and Persistent witnessed strong buying interest from market participants as they scaled their fresh 52-week highs on Tuesday, signalling bullish sentiment.
Stocks seeing selling pressure
AKG Exim, Suryoday SFB, Suvidhaa Infoserve, Jump Networks, LCC Infotech and DSJ Communications witnessed strong selling pressure in Tuesday’s session and hit their 52-week lows, signalling bearish sentiment on these counters.
Sentiment meter favours bulls
Overall, market breadth remained in favour of bulls. As many as 289 stocks on the BSE 500 index settled the day in the green, while 208 settled the day in the red.
Podcast: What limited the downside in Nifty >>>
Tuesday’s fall might have put an end to the four-day winning streak for domestic indices but it avoided a major selloff for the day. Fears of a rise in inflation and reversal of stimulus in the US spooked investors the world over. Sensex settled the day 341 points lower while Nifty50 managed a close at 14,850-odd level, down 0.6 per cent. We spoke to Ajit Mishra of Religare Broking to share his views on the market.
