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

Domestic blue-chip equity indices Sensex and Nifty closed more than 1 per cent higher on Friday, led by IT stocks, as a bigger-than-expected drop in US jobless claims eased fears of recession in the world’s largest economy.

The NSE Nifty 50 index rose 1.04 per cent to 24,367, while the S&P BSE Sensex added 1.04 per cent to 79,705.9.

Both indices could face internal volatility on Monday due to fresh claims by Hindenburg Research against the family of SEBI Chairperson Madhabi Puri Buch in the Adani controversy.

When trading resumes on Monday morning, there could be an initial knee-jerk reaction as major investors may adopt a cautious stance and maintain light positions until more clarity emerges.

However, analysts generally do not expect a significant impact on the stock market“Overall, this is not going to have a big impact on the market on Monday morning. The market has behaved in a very mature manner. It is not as if the sky is going to fall,” said Kranthi Bathini, head of equity strategy at WealthMills Securities.

Here’s how analysts view the market:

“Important technical levels were tested both on the upside and downside this week. The key positive for the Nifty is that it is recovering from the lower levels and is also holding above the psychological support level of 24,000 on a closing basis,” said Tejas Shah, Technical Research, JM Financial & BlinkX. Hrishikesh Yedve, Asit C. Mehta Investment Interrmediates, said, “If the index sustains above 24,420, it could trigger a fresh rally towards 24,600-24,700 levels. Hence, a buy-on-dip strategy should be adopted for the Nifty. On the downside, 24,000 will act as an important support level, where the 50-DEMA support is placed.”

That said, let’s take a look at what some key indicators suggest for Monday’s action:

US market

The S&P 500 closed higher on Friday and was little changed for the week after recouping most of its losses since Monday’s sharp drop that was prompted by recession fears and the unravelling of a yen-funded global carry trade.

The technology sector gave the index its biggest boost on Friday, and the Cboe Volatility Index, financial worldThe “fear gauge” fell after rising at the start of the week.

The Dow Jones Industrial Average rose 0.13%, the S&P 500 gained 0.47% and the Nasdaq Composite added 0.51%. For the week, the S&P 500 fell 0.05%, the Dow fell 0.6% and the Nasdaq fell 0.2%.

European stocks

Europe’s main index rose on Friday, with continued support from healthcare stocks, posting gains for a fourth straight session and marking a gain in a turbulent week that began with a drop in global stocks on fears of a U.S. recession.

The STOXX 600 continental index closed up 0.6% and briefly regained the 500-point mark during the day.

France’s CAC 40, Germany’s DAX, Spain’s IBEX 35, Italy’s FTSE MIB and Britain’s FTSE 100 all gained between 0.1% and 0.8%.

Technical view: hammerhead sail

Nifty ended Friday’s session with a gain of 250 points but well below the 24,400 mark and formed a hammer candle on the weekly chart.

On the daily charts we can observe that the Nifty has witnessed a drop from 25100 – 23900 and is now in the process of recovering that drop. It can rally towards 24520 – 24651 where the 50% and 61.82% Fibonacci retracement levels of the drop are located. The immediate support on the downside is located at 24200 – 24150 where the 40-day moving average is located, said Jatin Gedia of Sharekhan.

Stocks that show an upward bias

Momentum Indicator Moving Average Convergence Divergence (MACD) showed bullish trade on the counters of Avanti Feeds, Trent, Affle India, CEAT, Oil India and Prism Johnson, 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 Ramco Cements, Jubilant Food, Adani Transmission, CreditAccess Grameen, Divi’s Laboratories and Trident among others. The bearish crossover of the MACD on these counters indicated that they had just started their bearish journey.

Most active stocks in terms of value

Trent (Rs 4,221 crore), HDFC Bank (Rs 2,205 crore), NBCC (Rs 1,783 crore), Tata Motors (Rs 1,652 crore), Zomato (Rs 1,418 crore), Kfin Technologies (Rs 1,274 crore) and Oil India (Rs 1,272 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 27.6 crore), Suzlon Energy (shares traded: Rs 14.2 crore), YES Bank (shares traded: Rs 10.3 crore), NBCC (shares traded: Rs 9.7 crore), SAIL (shares traded: Rs 7.6 crore), Zomato (shares traded: Rs 5.2 crore) and HFCL (shares traded: Rs 4.3 crore), among others, were among the most traded stocks in the session on NSE.

Stocks that show buying interest

Shares of Kfin Technologies, Avanti Feeds, Trent, Affle India, Jubilant Ingrevia, Bombay Burmah and Oil India, among others, witnessed strong buying interest from market participants as they touched their fresh 52-week highs, indicating bullish sentiment.

Stocks see selling pressure

Equitas Small Finance Bank shares hit their 52-week lows, indicating bearish sentiment on the counters.

Sentiment gauge favors bulls

Overall, market breadth favored the bulls as 2,283 stocks ended in the green, while 1,626 names closed in the green.

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