Ahead of Market: 10 things that will decide D-Street action on Friday

Domestic benchmark equity indices advanced on Thursday, led by IT stocks after softer-than-expected US inflation data reignited hopes of at least two interest rate cuts in 2024.

The blue-chip NSE Nifty 50 rose 0.92% to 22,404 points, while the S&P BSE Sensex settled 0.93% higher at 73,664. Twelve of the 13 major sectors ended in positive territory, with U.S.-rate sensitive IT stocks adding 1.66%.

Here's how analysts read the market pulse:

"Finally, the index has moved back up into the rising channel after a few days of failed attempts. Over the next few days, the bulls might have the upper hand in the market as the index moved above the critical moving average after several days. On the higher side, the Nifty might move towards 22,600 in the short term. Support on the lower end remains at 22,250, the sentiment is expected to remain strong as long as it holds above this level," said Rupak De, Senior Technical Analyst at LKP Securities.

Shrikant Chouhan, Head Equity Research at Kotak Securities, said, "We are of the view that a 50-day SMA or 22310/73500 would act as a sacrosanct support zone for the bulls. As long as the index is trading above the same, the bullish momentum is likely to continue. On the higher side, immediate resistance for the index could be 22500-22600/74000-74200. On the flip side, below 50 day SMA or 22310/73500 uptrend would be vulnerable. Below the same, traders may prefer to exit out from the trading of long positions."

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

US market

The Dow index topped 40,000 points for the first time Thursday, propelled by strong Walmart earnings after a benign inflation report resulted in records in the prior session.

Near 1505 GMT, the Dow Jones Industrial Average stood at 40,036.40, up 0.3 percent.

The broad-based S&P 500 also climbed 0.3 percent to 5,324.69, along with the tech-rich Nasdaq Composite Index, which stood at 16,796.00.

The landmark came after all three indices rallied on Wednesday following an inflation report that revived hopes of Federal Reserve interest rate cuts.

Hitting 40,000 points is a "milestone" for the index best known to the average investor, said Art Hogan, chief market strategist of B. Riley Wealth.

European shares

European shares edged lower on Thursday, weighed down by German engineering group Siemens after a second-quarter industrial profit miss, while automobile and energy stocks were also dragged by multiple industry heavyweights trading ex-dividend.

The pan-European STOXX 600 was down 0.1% as of 0830 GMT, after hitting a fresh record high on Wednesday, as a lower-than-expected rise in U.S. consumer prices in April boosted bets for a September rate cut by the Federal Reserve in a boost to global sentiment.

The STOXX 600 gained for nine straight days till Wednesday as investors cheered robust corporate earnings in the face of the ECB's all-time-high interest rates after European shares' record-breaking run came to a halt last month.

Tech View: Small Hanging Man pattern

Nifty ended the Thursday expiry higher by 203 points to close above the 50 and 20-day SMA (Simple Moving Average) and form a small Hanging Man pattern on the daily charts.

The formation of long lower shadows for two occasions in the last four sessions signals emergence of sharp buying on dips. This is a positive indication and suggests more upside ahead. Immediate resistance of 22,300 (mid part of long bear weekly candle of last week) has been taken out on the upside on Thursday and the Nifty is expected to reach another resistance of around 22600 levels (upper part of the last weekly candle) in the near term. Immediate support is at 22280 levels, said Nagaraj Shetti, Senior Technical Research Analyst, HDFC Securities.

Stocks showing bullish bias:

Momentum indicator Moving Average Convergence Divergence (MACD) showed bullish trade on the counters of Linde India, Trent, KEI Industries, Mazagon Dock Shipbuilders, and Bharat Bijlee among others.

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

Stocks signaling weakness ahead

The MACD showed bearish signs on the counters of Lux Industries, Tube Investment of India, Sky Gold, Jana Small Finance Bank, and KFin Technologies among others. Bearish crossover on the MACD on these counters indicated that they have just begun their downward journey.

Most active stocks in value terms

Tata Motors (Rs 2,912 crore), HDFC Bank (Rs 2,533 crore), RIL (Rs 2,081 crore), M&M (Rs 1,731 crore), SBI (Rs 1,665 crore), ICICI Bank (Rs 1,603 crore), and Bharti Airtel (Rs 1,597 crore) were among the most active stocks on NSE in value terms. Higher activity on a counter in value terms can help identify the counters with highest trading turnovers in the day.

Most active stocks in volume terms

Tata Steel (Shares traded: 4.1 crore), Tata Motors (Shares traded: 3.1 crore), ONGC (Shares traded: 2.3 crore), ITC (Shares traded: 2.3 crore), SBI (Shares traded: 2 crore), Power Grid (Shares traded: 1.9 crore), and HDFC Bank (Shares traded: 1.7 crore) were among the most traded stocks in the session on NSE.

Stocks showing buying interest

Shares of M&M, Bharti Airtel, Hero MotoCorp, and Hindalco among others witnessed strong buying interest from market participants as they scaled their fresh 52-week highs, signaling bullish sentiment.

Stocks seeing selling pressure

No major stocks hit their 52-week low on Thursday.

Sentiment metre favours bulls

Overall, market breadth favoured bulls as 2,040 stocks ended in the green, while 1,798 names settled in the red.

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