Waiting for the market: 10 factors that will determine the performance of stocks on Monday

Indian benchmark stock indexes rose to record highs and posted weekly gains on Friday as a massive interest rate cut by the U.S. Federal Reserve earlier in the week stoked investor risk appetite in global markets.

The NSE Nifty 50 added 1.48 per cent to 25,790 and the S&P BSE Sensex gained 1.63 per cent to 84,544, hitting record closing highs.

The Sensex also crossed the 84,000 mark for the first time on Friday. During the week, the Nifty and Sensex gained 1.7 per cent and 2 per cent respectively, recording their fifth week of gains in six.

Here’s how analysts view the market:

“On the daily charts we can observe that the Nifty has been consolidating around the range of 24,200 – 24,150 where the 40-day moving average is located. The structure is still weak and with the momentum indicators also having a negative crossover which also supports our bearish stance. In case of a spike towards the key moving averages 24,250 – 24,300, then it should be used as a selling opportunity for the targets of 23,890 – 23,600. On the upside, 24,300 is the immediate hurdle from a short-term perspective,” said Jatin Gedia of Sharekhan.Tejas Shah of JM Financial & BlinkX said, “The Nifty index also closed above the crucial resistance zone of 25,500-550 this week and we expect further uptrend activity and the Nifty to move towards the next psychological resistance of 26,000 either on an ongoing basis from current levels or maybe after a minor dip. Support for the Nifty is now seen at 25,700 and 25,500-550. On the upside, the next psychological resistance lies at 26,000 Mark. Overall, further follow-through strength can be expected in today’s trading session.”That said, let’s take a look at what some key indicators suggest for Monday’s action:

US Market:

U.S. stocks closed almost unchanged on Friday as investors paused their buying after a strong rally in the previous session that was fueled by a further interest rate cut by the Federal Reserve, while Nike’s gains helped propel the Dow to a record high.

After posting their biggest daily percentage gains since mid-August, the major averages remained subdued for most of the session but managed to secure weekly gains of at least 1%.

Stocks briefly pared losses after comments from Fed Governor Christopher Waller raised expectations that the central bank will cut interest rates by 50 basis points at its November meeting, after cutting them by 50 basis points on Wednesday.

European stocks:

European stocks fell on Friday after a rally in the previous session boosted by the U.S. Federal Reserve’s massive interest rate cut, while drugmaker Novo Nordisk fell on disappointing data on anti-obesity pills.

The pan-European STOXX 600 index closed down 1.4%, although it recorded a second consecutive week of gains.

All major European stock markets suffered heavy losses, except Spain, which closed down 0.2%.

Tech Outlook: Long Bullish Candle

The Nifty formed a long bullish candle, indicating a decisive bullish breakout in the market from the range-bound movement of the last 4-5 sessions. The Nifty has broken out of the range as well as the trend line resistance around 25,500 levels.

A long bullish candle has formed on the daily chart. The short-term trend of the Nifty is sharply positive. Having rallied in one session on Friday, there is a possibility of a short-term consolidation/respite pattern before further upside. The next upside targets as per Fibonacci extension should be watched around 26250. The immediate support is at 25650, said Nagaraj Shetti of HDFC Securities.

In the open interest (OI) data, the highest OI on the buy side was seen at the strike prices of 25,800 and 26,000, while on the sell side, the highest OI was at the strike price of 25,700, followed by 25,600 and 25,800.

Stocks showing bullish bias:

Momentum Indicator Moving Average Convergence Divergence (MACD) showed bullish trade on the counters of Cochin Shipyard, Mazagon Dock Shipbuilders, IRB Infra Developers, Phoenix Mills, Bajaj Holdings and Sammaan Capital, among others.

The MACD is known for signaling trend changes in traded securities or indices. When the MACD crosses above the signal line, it gives a bullish signal, indicating that the security’s price may experience an upward movement and vice versa.

Actions that indicate weakness in the future:

The MACD showed bearish signals on the counters of Usha Martin, Anand Rathi Wealth, Paytm, SI BankFACT and LTIMindtree, among others. The bearish crossover in the MACD on these indicators indicated that they have just begun their downward journey.

Most active stocks in terms of value:

ICICI Bank (Rs 9,753 crore), HDFC Bank (5,257 crores), Reduce (Rs 4,589 crore), Bharti Airtel (Rs 3,686 crore), M&M (Rs 3,655 crore), Kotak Mahindra Bank (Rs 3,582 crore) and Infosys (Rs 2,899 crore), among others, were among the most active stocks on NSE in terms of value. Higher activity on a counter in terms of value can help identify the counters with higher trading volumes on the day.

Most active stocks in terms of volume:

Vodafone Idea (shares traded: Rs 152.8 crore), IRB Infra Developers (shares traded: Rs 13 crore), Zomato (Shares traded: 8.4 crore), GMR Infra (Shares traded: 8.2 crore), YES Bank (Shares traded: 7.8 crore), Suzlon Energy (shares traded: Rs 7.4 crore) and ICICI Bank (shares traded: Rs 7.3 crore), among others, were among the most traded stocks in the session on NSE.

Stocks showing buying interest:

Shares of Concord Biotech, Asahi India Glass, Maximum health careBSE, Shyam Metalics, JSW Energy and Inox Wind, among others, witnessed strong buying interest from market participants as they hit their fresh 52-week highs, indicating bullish sentiment.

Stocks see selling pressure:

Shares of Gujarat Ambuja Exports and Vodafone Idea hit their 52-week lows, indicating bearish sentiment in the market.

Bullish sentiment gauge:

Overall, market breadth favored the bulls as 2,383 stocks ended in the green, while 1,572 names closed in the red.

(Disclaimer: The recommendations, suggestions, views and opinions of the experts are their own and do not represent the views of the Economic Times)