Before the market: 10 things that will decide stock action on Monday

Indian benchmark stock indices Sensex and ingenious50 broke a three-day losing streak on Friday as gains in axle bench boosted financial sector heavyweights, although foreign fund outflows dragged benchmark indices to a third weekly loss.

The Nifty 50 index closed up 0.42% at 24,854 points, after hitting a two-month low earlier in the session, while the S&P BSE Sensex added 0.27% to 81,224.

This is how analysts press the market:

“The Nifty has risen sharply after forming a panic bottom around 24,570, failing to sustain below 24,700. On the hourly chart, a positive divergence is seen at the RSI (14), indicating a shift towards positive price momentum. Immediate resistance seen at 24,900, which was previously acting as support. A decisive move above 24,900 could induce a short-term rally. The trend is likely to remain strong as long as the Nifty remains above. 24,750,” said Rupak De of LKP Securities.

Tejas Shah of JM Financial & BlinkX said: “As long as Nifty remains above 24,700 Mark, there is no big sense of panic at the moment. Support for Nifty is now seen at 24,700-750 and 24,500. On the side above, The immediate psychological resistance for Nifty is at 25,000 Mark and the next crucial resistance zone is at 25,250-300 levels Overall, the market is oversold but still under the clutches of the bears and hence not. “You have to be too adventurous until you see some rebound.”

That said, here’s a look at what some key indicators suggest for Friday’s action:

US market:

The Dow Jones Industrial Average and S&P 500 posted all-time closing highs on Friday, and the Nasdaq was also in positive territory, as markets were buoyed by a jump driven by gains in Netflix stock and earnings broader gains in technology stocks. Wall Street’s three major benchmarks also comfortably notched a sixth consecutive weekly gain, their longest weekly winning streak since late 2023. For the week, the S&P 500 gained 0.9%, the Nasdaq Composite advanced 0, 8% and the Dow Jones Industrial Average rose 1%.

European actions:

Europe’s STOXX 600 closed higher on Friday as technology stocks staged a strong recovery at the end of a choppy week, while the European Central Bank’s rate cut and a flurry of corporate earnings helped the index to a second consecutive week of earnings.

The STOXX 600 closed up 0.2% as the technology sector led gains with a 2% jump.

Technical view:

A reasonable positive candle with a small lower shadow formed on the daily chart. Technically, this pattern indicates a short-term reversal in the bullish market after the downward correction. Friday’s chart pattern signals the formation of a bullish piercing line type pattern.

Friday’s sustainable rise from the lows could be an encouraging factor for the Bulls’ comeback. The subsequent bullish move from here is expected to confirm a crucial bottom reversal pattern. Immediate support is at 24,500 and the next overhead resistance is around 24,950-25,000 levels, said Nagaraj Shetti of HDFC Securities.

In the open interest (OI) data, the highest OI on the buy side was observed at 25,000 and 24,900 strike prices, while on the sell side, the highest OI was at the 24,800 strike price followed by 24,700.

Stocks showing a bullish bias:

The Moving Average Convergence Divergence (MACD) Momentum Indicator showed bullish trading on the counters. Aditya Birla Real Estate, Texas Networks, Zee Entertainment Companies, wipro, IDBI Bankand Bank of Baroda inter alia.

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

Stocks that indicate weakness in the future:

MACD showed bearish signs on BSE counters, Varun Drinks, Olectra GreenTech, Varroc Engineering, Lloyds Metalsand DB Realty Express among others. The bearish MACD crossover on these counters indicated that they have just begun their downward journey.

Most active stocks in terms of value:

Naval Builders Mazagón Dock (3,830 million rupees), Zomato (Rs 2,819 crore), Axis Bank (Rs 2,469 crore), BSE (Rs 2,461 crore), HDFC Bank (Rs 2,077 crore), Wipro (Rs 2,048 crore) and Infosys (Rs 1,991 crore), among others, were among the most active stocks on NSE in terms of value. Greater activity on a counter in terms of value can help identify the counters with the highest trading volume during the day.

Most active stocks in terms of volume:

Zomato (shares traded: 10.8 million rupees), Manappuram Finance (shares traded: 8 million rupees), JP Power (shares traded: 7.2 million rupees), YES Bank (shares traded: 5.7 million rupees), Zee Entertainment Enterprises (shares traded: Rs 4.1 crore), Wipro (shares traded: Rs 3.7 crore) and Suzlon Energy (shares traded: Rs 3.6 crore), among others, were among most traded stocks in the session on NSE.

Stocks showing buying interest:

Shares of Motilal Oswal, Aditya Birla Real Estate, Anand Rathi Wealth, DOMS Industries, MCX India, NALCO and Torrent Power among others witnessed strong buying interest from market participants as they scaled their new highs of 52 weeks, indicating bullish sentiment.

Stocks experiencing selling pressure:

Shares of Ujjivan Small Finance Bank, Easy Trip Planners and Zee Entertainment Enterprises hit their 52-week lows, indicating bearish sentiment on the counter.

The sentiment meter indicates:

Overall, market breadth favored the bears as 1,839 stocks ended in green, while 2,110 names ended in red.

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