Nifty ended below the crucial 15,700 level and formed a ‘3 Weeks Tight’ pattern on technical charts, indicating limited upside. Will the market correct more in the coming days?
Here’s how analysts read the market pulse:-
Nirali Shah of Samco Securities said the index has established short-term support at 15,500 level, and a breach of this level will raise the red flag to the ongoing uptrend. “This might trigger a profit-booking move and possibly short-term weakness in the market,” she said.
Mazhar Mohammad of Chartviewindia.in said the technical oscillators are deteriorating in favour of the bears, and the weekly MACD chart has generated a sell signal. “It looks prudent to avoid buying the dips whereas intraday traders are advised to go short below 15,630 level,” he said.
That said, here’s a look at what some of the key indicators are suggesting for Monday’s action:
US shares post record closing highs
The three major US stock indexes rallied to record closing highs on Friday as financials and other economically focused sectors rebounded from a selloff sparked by growth worries earlier in the week. The Dow Jones Industrial Average rose 448.23 points, or 1.3 per cent, to 34,870.16, the S&P 500 gained 48.73 points, or 1.13 per cent, to 4,369.55 and the Nasdaq Composite added 142.13 points, or 0.98 per cent, to 14,701.92. For the week, the Dow is up 0.2 per cent, and the S&P 500 and Nasdaq each added 0.4 per cent.
European shares rise on bargain-hunting
European stocks jumped more than 1 per cent on Friday, posting their best session in two months and erasing all of this week’s losses, as investors sought bargains after one of the worst sell-offs this year on global economic recovery worries. The pan-European STOXX 600 index gained 1.3 per cent, with sectors that took a hit earlier this week such as automakers and miners surging 4 per cent and 3.4 per cent, respectively. The mining sector marked its best session in two months.
Tech View: Nifty forms ‘3 Weeks Tight’ chart pattern
Nifty50 on Friday fell for the second session in a row. During the day, the NSE barometer tested its recent swing low at around 15,630, before recovering some ground by the end of the day. The index formed a small bearish candle, with a long wick, reflecting intraday buying. Analysts said the index is taking a breather and the upside looks capped for now. Since the last five weeks, Nifty50 has been caught in a trading range between 15,950 and 15,500 levels, said independent analyst Manish Shah. “This is ‘3 Week Tight’ chart pattern and within the context of the trend, we have a pause before the push,” he said.
Check out the candlestick formations in the latest trading sessions
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F&O: Easing VIX offers some hope
India VIX fell 4.55 per cent from 13.56 to 12.94 level. Declines in the VIX after a spurt in the last session have provided some stability to the market. On the options front, maximum Put Open Interest stood at 15,500 followed by 15,000 levels, while maximum Call OI was seen at 16,000 followed by 15,800 levels. Minor Call writing was seen at 15,700 and then 16,100 levels, while there was minor Put writing at 15,200 and then 15,300 levels. Options data suggested an immediate trading range between 15,500 and 15,900 levels.
Stocks showing bullish bias
Momentum indicator Moving Average Convergence Divergence (MACD) showed bullish trade setup on the counters of Jindal Stainless, IRB Infrastructure, Kitex Garments, D-Link (India), Just Dial, Bharti Airtel, Dhani Services, Max Ventures, Navkar Corporation,
, Sutlej Textiles, Nectar Lifesciences, Rites, GHCL, Jindal Worldwide, Smartlink Holdings, Aegis Logistics, Bajaj Finserv, Filatex India, Vardhman Textiles, EIH, Balaji Telefilms, Jubilant Industries, Shalimar Paints, Kalyani Steel, Royal Orchid Hotels, HOV Services and Nalwa Sons Investment.
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 Suzlon Energy, ICICI Bank, Axis Bank,
, NRB Bearings, Dharani Sugars, , Quick Heal Technology, Syngene International, , ICICI Lombard General Insurance, Orient Abrasives, PI Industries, Suumaya Industries, JMC Projects, Triveni Turbine, DCM Shriram, , RPP Infra Projects, AIA Engineering, Dhanuka Agritech, Uttam Sugar Mills, Vinyl Chemicals, DCM Nouvelle, Praxis Home Retail, Wendt India, The United Nilgiri and Welspun Investments. Bearish crossover on the MACD on these counters indicated that they have just begun their downward journey.
Friday’s most active stocks in value terms
Tata Steel (Rs 2,179.54 crore), TCS (Rs 2,057.43 crore), Tata Motors (Rs 1,493.60 crore), Adani Ports SEZ (Rs 1,082.91 crore), Just Dial (Rs 1,011.61 crore), Bajaj Finserv (Rs 1,006.06 crore), Bajaj Finance (Rs 886.82 crore), RIL (Rs 865.38 crore), HDFC Bank (Rs 805.09 crore) and Granules India (Rs 746.94 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.
Friday’s most active stocks in volume terms
Reliance Communication (Shares traded: 23.49 crore), Vodafone Idea (Shares traded: 17.90 crore), JP Power (Shares traded: 9.34 crore), YES Bank (Shares traded: 6.71 crore), Suzlon Energy (Shares traded: 5.03 crore), Tata Motors (Shares traded: 4.88 crore), BHEL (Shares traded: 4.62 crore), PNB (Shares traded: 4.51 crore), Dish TV India (Shares traded: 4.32 crore) and SAIL (Shares traded: 3.60 crore) were among the most traded stocks in the session.
Stocks showing buying interest
Macrotech Developers, Jindal Stainless, IRB Infra Development, Hinduja Global and Tide Water Oil witnessed strong buying interest from market participants as they scaled their fresh 52-week highs, signalling bullish sentiment.
Stocks seeing selling pressure
Uttam Galva Steels and RIL (PP) witnessed strong selling pressure and hit their 52-week lows, signalling bearish sentiment on these counters.
Sentiment meter favours bulls
Overall, the market breadth remained in favour of the bulls. As many as 264 stocks on the BSE500 index settled the day in the green, while 226 settled the day in the red.
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