Even though the 50-scrip Nifty rose for the sixth straight session and closed at a lifetime high, it formed an indecisive Doji on the daily chart, signalling weakness and some profit booking ahead. Analysts said the index will need to hold 15,300 levels to witness any further bounce. Will Nifty manage to hit new highs next week or is some market correction on the cards?
Here’s how analysts read the market pulse:
Shrikant Chouhan of Kotak Securities said that 15,250 and 15,100 levels are big pillars for the index and as long as the index stays above that, he sees 16,000-16,200 coming. “The strategy should be to buy on dips,” he said.
Nirali Shah, Head of Equity Research, Samco Securities, said, this week’s market move was slow and lacked strength. “It is likely the benchmark index could face resistance at higher levels. The bulls are getting tired as the index is trading much higher than its mean levels. Hence, a brief corrective dip cannot be ruled out. The level of 15,160 is the immediate support level for Nifty50,” she said.
That said, here’s a look at what some of the key indicators are suggesting for Monday’s action:
US shares shake off inflation fears
US stocks climbed on Friday as investors brushed off a stronger-than-expected inflation reading, as both the Dow and S&P 500 indexes clinched their first weekly gain in the past three weeks. The Dow Jones Industrial Average rose 64.81 points, or 0.19 per cent, to 34,529.45, the S&P 500 gained 3.23 points, or 0.08 per cent, at 4,204.11 and the Nasdaq Composite added 12.46 points, or 0.09 per cent, at 13,748.74.
European shares end at record high
European shares rose to a record high on Friday as British-exposed financial stocks gained following a hawkish comment from a Bank of England official, with the prospects of increased US fiscal spending boosting market sentiment. The pan-European STOXX 600 index ended 0.6 per cent higher to a record high of 448.98 points and added 1 per cent this week.
Tech View: Back-to-back Dojis suggest bulls are tired
Nifty50 on Friday remained in a tight range of 75 points, despite hitting a record high level. While the formation of higher highs and lows continued, so was the formation of another indecisive Doji on the daily chart. On the weekly scale, a small bearish candle was formed. Analysts said the bulls looked tired and some profit booking cannot be ruled out early next week. They expect 15,250 and 15,100 levels to offer support to the index and advised a buy on dips strategy. “Albeit celebrations in the bull camp, the index ended up with an indecisive Doji formation. Moreover, Friday’s rally was seen on the back of RIL alone, which added 90 points to Nifty gains. The market breadth was in fact decisively skewed in favour of the bears, suggesting that the broader market was cautious and made use of the rally to book profits. To retain positive bias, Nifty50 needs to sustain above Friday’s minor bullish gap zone of 15,394-384 levels,” said Mazhar Mohammad of Chartviewindia.in.
Check out the candlestick formations in the latest trading sessions
ETMarkets.comF&O: VIX eases to lowest level since Feb 2020
India VIX fell 12.59 per cent from 19.91 to 17.40 level. India VIX is at its lowest level of the last 65 weeks since February 2020 after its biggest single-day drop since November 25, 2020. A falling VIX is likely to extend the bullish market momentum towards new high territory. Since it is the beginning of a new series, options data lay scattered at different strikes. On the options front, maximum Put open interest stood at 14,000 level followed by 14,500 strike while maximum Call OI stood at 16,000 followed by 15,500. Call writing was seen at strike prices 16,000 and 15,800 while there was Put writing at 15,000 and 14,500 levels. Options data suggested a broader trading range between 15,000 and 15,800 levels.
Stocks showing bullish bias
Momentum indicator Moving Average Convergence Divergence (MACD) showed bullish trade setup on the counters of Jain Irrigation, Time Technoplast, Tata Chemicals, HDFC Life Insurance, Tata Consumer Products, Grasim Industries, Deepak Fertilisers, Redington (India), Metropolis Healthcare,
, GlaxoSmithKline Pharma, Pearl Polymers, Timken India, and JSW Holdings.
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 Bharat Heavy Electronics, NTPC, NBCC (India), Power Grid, TVS Motor, Karnataka Bank, GSFC, NLC India, Hindustan Zinc, Ipca Laboratories, NOCIL, Sun Pharma Advanced, Punjab & Sind Bank, Borosil, Sanghi Industries, Gujarat Industries, Shilpa Medicare, Waterbase, Shree Digvijay, Balmer Lawrie,
, Aksh Optifibre, Jindal Worldwide, Punjab Chemicals, Cochin Shipyard, Nelcast, Intense Technologies, Uflex, Mangalam Cement, Apcotex Industries, Emmbi Industries, Solara Active Pharma, Umang Dairies, Jindal Drilling, Krebs Biochemicals, Bajaj Holdings, Agro Tech Foods, JBM Auto, Sanginita Chemicals, BF Investment, Ador Welding, Alphageo (India), Vesuvius India, Manugraph India, MMP Industries, Golden Tobacco, Rane Engine Valve and Kirloskar Industries. Bearish crossover on the MACD on these counters indicated that they have just begun their downward journey.
Most active stocks in value terms
RIL (Rs 5,387.88 crore), SBI (Rs 2,777.86 crore), Tata Steel (Rs 2,158.10 crore), Sun Pharma (Rs 1,911.14 crore), PNB (Rs 1,406.07 crore), HDFC Bank (Rs 1,327.34 crore), Axis Bank (Rs 1,279.66 crore), Adani Ports SEZ (Rs 1,051.39 crore), Just Dial (Rs 1,044.45 crore) and M&M (Rs 971.65 crore) were among the most active stocks on Dalal Street 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
PNB (Shares traded: 33.57 crore), Vodafone Idea (Shares traded: 19.73 crore), Reliance Power (Shares traded: 18.15 crore), Reliance Communication (Shares traded: 17.88 crore), Bank of Baroda (Shares traded: 9.33 crore), YES Bank (Shares traded: 8.25 crore), SAIL (Shares traded: 6.64 crore), Dish TV India (Shares traded: 6.52 crore), SBI (Shares traded: 6.51 crore) and Canara Bank (Shares traded: 6.05 crore) were among the most traded stocks in the session.
Stocks showing buying interest
Redington, Lux Industries, Metropolis Health, CDSL and
witnessed strong buying interest from market participants as they scaled their fresh 52-week highs, signalling bullish sentiment.
Stocks seeing selling pressure
DSJ Communications, SMC Global Securities, Suryoday Small Finance Bank and Vikas Lifecare RE witnessed strong selling pressure and hit their 52-week lows, signalling bearish sentiment on these counters.
Sentiment meter favours bears
Overall, the market breadth remained in favour of bears. As many as 196 stocks on the BSE500 index settled the day in the green, while 297 settled the day in the red.
Podcast: How to find the right smallcap for your portfolio? >>>
If you think Nifty hitting a new record high even as the country is still grappling with the impact of the second wave of Covid-19 is too much of an exuberance, just look at the midcap and smallcap indices. On a year-to-date basis, Nifty Smallcap index has given 3 times more returns than Nifty. Against Nifty’s 10% jump so far in the calendar year, the midcap index is up 23% and smallcap index 31%. In this special podcast with independent market expert Rajiv Nagpal, we try to understand valuations in both the index and the broader market and hunt for money-making opportunities in the world of smallcaps.
