The stock market remained closed on Friday on account of Guru Nanak Jayanti.
Here’s how analysts read the market pulse:-
Palak Kothari, Research Associate at Choice Broking said that the index has given a breakdown of the rising trend line and has closed below 50-DMA, which suggests weakness in the next trading session.
Mazhar Mohammad of Chartviewindia.in said A strong bearish candle is visible on the weekly charts, hinting that bears are in the driver’s seat for the time being. “Going forward, it looks critical for the bulls to defend their 50-day EMA as close below this level can resume the downswing with deeper cuts, with initial targets placed around 17,000 levels,” he said.
That said, here’s a look at what some of the key indicators are suggesting for Monday’s action:
US shares
US equities were mixed at the close on Friday, as gains in the Technology, Consumer Goods and Utilities sectors propelled shares higher while losses in the Oil & Gas, Financials and Telecoms sectors led shares lower. At the close in NYSE, the Dow Jones Industrial Average lost 0.75%, while the S&P 500 index declined 0.14%, and the NASDAQ Composite index added 0.40%.
European shares
European stocks ended in the red on Friday, clocking their first weekly decline in seven weeks on concerns over the economic damage from fresh COVID-19 lockdowns in the region that hammered cyclical sectors such as banks and automakers. The pan-European STOXX 600 index fell 0.3 percent after hovering near record highs earlier in the session. The FTSE 100 was down 0.45% while France’s CAC 40 was off 0.42% and Germany’s DAX was lower by 0.38%.
Tech View: Weakness ahead
With the Nifty50 ending below its 50-day moving average, analysts said that the market was in for more weakness in the coming sessions. Analysts warned traders to move carefully in the market as it may get dicey in the coming sessions. It will be important for the index to move above 18,100 points to maintain a semblance of positive momentum, said analysts.
F&O: Selling may exacerbate
In the derivatives segment, traders continued to buy out-of-money put options of the Nifty50 index indicating that they expect more selling pressure ahead. The 17,500 strike price put option saw strong buying suggesting that traders expect the index to test that level going ahead.
Stocks showing bullish bias
Momentum indicator Moving Average Convergence Divergence (MACD) showed bullish trade setup on the counters of Trident, MTNL, Power Grid, Chambal Fert, and Borosil Renewables.
The MACD is known for signaling 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 Vedanta, Indiabulls Real Estate, Karur Vysya Bank, Indian Energy Exchange, and Karnataka Bank. Bearish crossover on the MACD on these counters indicated that they have just begun their downward journey.
Most active stocks in value terms
One97 Communications (Rs 4087 crore), Escorts (Rs 3326 crore), Tata Motors (Rs 2420 crore), Vedanta (Rs 2205 crore), Tata Power (Rs 1969 crore), ICICI Bank (Rs 1574 crore), Apollo Hospitals (Rs 1223 crore), Tata Steel (Rs 1211 crore), SBI (Rs 1125 crore) and Sapphire Foods (Rs 1094 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
Vodafone Idea (Shares traded: 17.5 crore), PNB (Shares traded: 12.4 crore), Tata Power (Shares traded: 8.2 crore), Vedanta (Shares traded: 6.9 crore), Trident (Shares traded: 6.8 crore), YES Bank (Shares traded: 6.0 crore), Tata Motors (Shares traded: 4.7 crore), Zomato (Shares traded: 4.7 crore), and Bank of Baroda (Shares traded: 3.3 crore) were among the most traded stocks in the session.
Stocks showing buying interest: Escorts, Tanla Solutions, Borosil Renewables, Trident, Tata Tele and Brightcom Group witnessed strong buying interest from market participants as they scaled their fresh 52-week highs, signaling bullish sentiment.
Stocks seeing selling pressure
Aurobindo Pharma, Aditya Birla Sun Life AMC, Amara Raja Batteries, and Aegis Logistics witnessed strong selling pressure and hit their 52-week lows, signaling bearish sentiment on these counters.
Sentiment meter favours bears
Overall, the market breadth remained in favour of the bears. As many as 69 stocks on the BSE500 index settled the day in the green, while 431 settled the day in the red.
Podcast: Will 2022 bring a rude awakening for Indian investors?
