Here’s how analysts read the market pulse:
Gaurav Ratnaparkhi, Head of Technical Research at Sharekhan said that the hourly momentum indicator has been pushed into the oversold zone and has developed a positive divergence. “Unless Monday’s low of 17,280 breaks, Nifty50 can attempt a bounce to test its key hourly moving averages near 17,700,” he said.
Mazhar Mohammad of Chartviewindia.in said Nifty50 seems to be nearing its critical support levels, which are placed in the 17,150–17,000 range. “The last 22 trading sessions of fall from the highs of 18,604 levels seems to have carved out a descending channel, which will be confirmed if Nifty50 manages to defend 17,280-level on a closing basis on Tuesday,” he said.
That said, here’s a look at what some of the key indicators are suggesting for Tuesday’s action:
Wall Street hits record high
Wall Street shares rose to record levels on Monday and European stocks turned higher after U.S. President Joe Biden picked Jerome Powell to continue as Federal Reserve chair, in a move welcomed as a signal of stability by global investors. The S&P 500 rose 0.92 per cent to 4,741.35 and the Nasdaq Composite 0.81 per cent to 16,188.17 by 10:35 a.m. EST (1535 GMT). The Dow Jones Industrial Average rose 251.02 points or 0.71 per cent to 35,853.
European shares gain on Powell nomination
European stocks also traded higher after the news. Earlier they had been hit as traders weighed the likely impact of fresh European Covid-19 restrictions on economic prospects. Europe’s STOXX 600 equity benchmark clawed back its losses to rise 0.26 per cent, while an MSCI gauge of European shares was down 0.5 per cent.
Tech View: Bears in full control
The Nifty50 index saw one of its biggest falls of the year as the index failed to sustain crucial support levels and gave in to selling pressure. Analysts suggested that the index needs to hold above the 17,280 points level in the coming session to avoid further sell-off.
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 17,000 strike price put option saw the highest addition of open interest indicating that traders expect the benchmark 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 Vodafone Idea, Vedanta, Kesoram Industries, Palred Tech, and RPP Infra.
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 MotherSon Sumi, IDFC, NHPC, Bandhan Bank, and Bharat Electronics. A 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 3468 crore), Bharti Airtel (Rs 2746 crore), RIL (Rs 2650 crore), Tata Motors (Rs 1969 crore), Vedanta (Rs 1885 crore), ICICI Bank (Rs 1540 crore), Tata Power (Rs 1431 crore), SBI (Rs 1408 crore), Bajaj Finance (Rs 1380 crore) and Zomato (Rs 1173 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 the highest trading turnovers in the day.
Most active stocks in volume terms
Vodafone Idea (Shares traded: 47 crore), YES Bank (Shares traded: 8.5 crore), Zomato (Shares traded: 7.9 crore), Trident (Shares traded: 7.9 crore), PNB (Shares traded: 6.7 crore), Tata Power (Shares traded: 6.2 crore), Vedanta (Shares traded: 5.9 crore), Bank of Baroda (Shares traded: 4.9 crore), and Tata Motors (Shares traded: 4.0 crore) were among the most traded stocks in the session.
Stocks showing buying interest
Tata Teleservices, Brightcom Group, Trident, Bharti Airtel, Tanla Solutions and Solar Ind witnessed strong buying interest from market participants as they scaled their fresh 52-week highs, signaling bullish sentiment.
Stocks seeing selling pressure
Paytm, Sapphire Foods, Johnson Controls, and Lupin 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 56 stocks on the BSE500 index settled the day in the green, while 444 settled the day in the red.
Podcast: Should investors wait to enter the market?
Sensex plunged 1,170 points for the day, which was the highest since April 12’s 1,700-odd points meltdown. Stocks such as Reliance Industries, Bajaj Finance, HDFC Bank, Infosys and ICICI Bank accounted for over half the losses the index made for the day. Nifty 50 plunged 2 per cent to close near 17,400, with fear gauge India VIX soaring 18 per cent to 17.52. Should investors wait for a further decline to enter the market?
