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

The Nifty50 fell 0.29% to 24,781, while the BSE Sensex closed 0.09% lower at 81,151. Both indexes fluctuated between initial gains of about 0.4% and a midday drop of almost 0.7%, before experiencing a partial recovery.

This is how analysts read the pulse of the market:

“Nifty remained volatile throughout the day as traders were unsure of the market direction. At the upper end, it found resistance at the 50EMA on the daily time frame. Furthermore, the index failed to move beyond 25000 , resulting in selling pressure that pushed up to 24700. If Nifty falls below 24700, the selling pressure may intensify. However, if it holds above 24700, a smart recovery towards 25050 could be expected,” he said. Rupak De from LKP Securities.

Sharekhan’s Jatin Gedia said: “Nifty witnessed selling pressure from the 25,000 mark, which coincides with a high concentration of open interest on the buy side, which implies resistance. On the downside, the 20-week average (24730), which defended itself well last week, is being tested again. Therefore, there is a clash between bulls and bears leading to higher volatility. Overall, we expect price action within the 24500 – 25200 range from a short-term perspective.”

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

Wall Street stocks fell slightly early Monday as major indexes pulled back from record highs in anticipation of a busy earnings week with Tesla and Boeing. Meanwhile, China’s central bank announced cuts to two key interest rates, taking them to record lows in a bid to boost the economy.

Boeing shares rose nearly five percent after labor negotiators reached an agreement to present a new contract to 33,000 workers in the Seattle area, potentially ending the month-long machinist union strike.

European actions:

The European STOXX 600 index fell 0.6% ahead of results from German giant SAP, which could weigh on a busy earnings week on both sides of the Atlantic.

The British pound and the euro each fell about 0.2% against the dollar, while the US dollar surpassed the 150 mark against the yen, rising 0.25% on the day.

Technical view:

A reasonable small candle with a small lower shadow formed on the daily chart. Technically, this pattern indicates a lack of strength in the market to show a sustainable bullish bounce. The market is still in a wider range of highs and lows from recent weeks.

Nifty’s underlying trend remains weak amid range movement. Having failed to sustain the recent bullish bounce, the market could revisit the lower range of 24,600-24,500 levels in the near term. Immediate resistance is at 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 24,900 and 24,800 strike prices, while on the sell side, the highest OI was at the 24,700 strike price followed by 24,500.

Stocks showing a bullish bias:

The moving average convergence divergence (MACD) momentum indicator showed bullish trading on the counters of Olectra Greentech, Tata Chemicals, Heritage Foods, Aster DM Healthcare and HDFC Bank among others.

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:

The MACD showed bearish signs on the counters of Apar Industries, Shakti Pumps, Persistent Systems, OFSS, Prataap Snacks, Whirlpool of India and Symphony, 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:

HDFC Bank (Rs 4,033 million), Amber Enterprises (Rs 2,784 million), Kotak Bank (Rs 2,342 million), Mazagon Dock Ship (Rs 2,327 million), Zomato (Rs 2,303 million), Tata Chemicals (Rs 2,275 million of rupees) and Bajaj automobile stocks (Rs 2,186 crore), among others, were among the most active 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: 8.8 crore), YES Bank (shares traded: 6.7 crore), RBL Bank (shares traded: 6.3 crore), JM Financial (shares traded: 5.6 crore), JP Power (shares traded: Rs 5.3 crore), Manappuram Finance (shares traded: Rs 3 crore) and IDFC First Bank (shares traded: Rs 2.7 crore), among others, were among the most traded stocks in the session on NSE.

Stocks showing buying interest:

Shares of Amber Enterprises, Suven Pharma, Netweb Technologies, MCX, Tech Mahindra, Dixon Technologies and Aditya Birla Real Estate among others witnessed strong buying interest from market participants as they scaled to new highs of 52 weeks, indicating bullish sentiment.

Stocks experiencing selling pressure:

Shares of Ujjivan Small Finance Bank, RBL Bank, IndusInd Bank, J&K Bank, IDFC First Bank, Equitas Small Finance Bank and CreditAccess Grameen hit their 52-week lows, indicating bearish sentiment on the counter.

The sentiment meter indicates:

Overall, market breadth favored the bears as 1,102 stocks ended in green, while 2,948 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)