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

Domestic equity indices The Sensex and Nifty closed in the red on Tuesday, weighed down by HDFC Bank, which is likely to see lower-than-expected capital inflows due to a staggered adjustment of its weighting in a key MSCI emerging market index. Broad-based selling pressure also contributed to the market’s decline.

The NSE 50 elegant The index fell 0.85% to 24,139, while the S&P BSE Sensex lost 0.87% to 78,956.

This is how analysts read the market pulse:

“On the daily charts, we can observe that the Nifty has seen a breakout of the consolidation to the downside. The selling pressure may intensify on the downside. The immediate support lies at 24037, which is the 40-day moving average. A break below it can take the Nifty to 23600. On the upside, 24300 is the immediate hurdle from a short-term perspective,” Jatin Gedia of Sharekhan.

Rupak De, Senior Technical Analyst at LKP Securities, said, “Bears have returned to the market as the index repeatedly failed to break above the 21-day EMA. The short-term trend looks negative. On the upside, 24,250 now serves as a fresh resistance level, and as long as Nifty remains below 24,250, the strategy should be to sell on rallies. On the downside, initial support is around 24,000; if the index breaks below this level, it can drop further towards 23,700.” That said, here’s a look at what some key indicators suggest for Wednesday’s action:US Market:
Wall Street advanced on Tuesday as producer price data indicated inflation pressures were easing, setting the stage for a possible Federal Reserve rate cut in September. In addition, Starbucks rose following the appointment of Chipotle’s Brian Niccol as chief executive.

Stocks were mixed on Monday, with the S&P 500 holding virtually unchanged and the Nasdaq posting modest gains. This came after a volatile week marked by mixed economic reports and a rate hike by Japan’s central bank.

Tech Outlook: Long Negative Candle
Nifty ended Tuesday’s session 208 points lower above the 24,100 level to form a long negative candle on the daily chart, indicating the possibility of a downside breakout of the range-bound movement.

The recent high of 24,472 seems to be a lower ceiling for the Nifty as per the daily time frame chart. A drop below another lower support of 24,000-23,900 levels could trigger a reasonable downside correction in the market. The immediate resistance lies at 24,350 levels, said Nagaraj Shetti of HDFC Securities.

Stocks showing bullish bias:
The Moving Average Convergence Divergence (MACD) momentum indicator showed bullish trading on the counters of Inox Wind Energy, TVS holdings, V-Mart Retail, India Glycols, CDSL, Suven Pharma and Wockhardt, 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 Atul, Sun TV Network, ICICI Prudential Life Insurance and Firstsource Solutions among others. The bearish crossover of the MACD on these counters indicated that they had just started their downward trajectory.

Most active stocks in terms of value:
HDFC Bank (Rs 4,360 crore), RVNL (Rs 2,459 crore), Triveni Turbine (Rs 1,674 crore), Suzlon Energy (Rs 1,588 crore), ICICI Bank (Rs 1,538 crore), SBI (Rs 1,419 crore) and Aarti Industries (Rs 1,322 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 53.8 crore), Suzlon Energy (shares traded: Rs 19.3 crore), Yes Bank (shares traded: Rs 17.5 crore), RattanIndia Infra (shares traded: Rs 13 crore), HFCL (shares traded: Rs 7.4 crore), Easy Trip Planners (shares traded: Rs 5 crore) and IRFC (shares traded: Rs 4.5 crore), among others, were among the most traded stocks in the session on NSE.

Stocks showing buying interest:
Shares of Triveni Turbine, Kaynes Technology, Fortis Healthcare, Ajanta Pharma, Gujarat Pipavav, Balrampur Chini and Oil India, among others, witnessed strong buying interest from market participants as they hit 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 meter favors bears:
Overall, market breadth favored the bears as 2,676 stocks ended in the red, while 1,266 names ended 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)