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

Amid Covid-19 restrictions in China and the prospects of a prolonged tightening cycle by the US Federal Reserve, Indian equities markets closed lower on Monday. BSE Sensex fell 519 points to 61,145, while its broader peer Nifty 50 ended just above the 18,150 level.

Here's how analysts read the market pulse:

“The sharp decline in crude prices is a huge positive for the domestic economy. However, the market did not respond favourably due to stronger headwinds from the global market. The prospect of a prolonged tightening cycle by the US Federal Reserve and the Chinese COVID restrictions affected the world market,” Vinod Nair, Head of Research at Geojit Financial Services, said.
“The short-term trend of Nifty seems to have turned down and the market is now approaching a crucial support zone of around 18,100-18,000 levels, which is expected to be a make or break for the market ahead. Failure to show any sustainable upside bounce from near the said support is likely to open sharp weakness for the market ahead,” Nagaraj Shetti, Technical Research Analyst at HDFC Securities, said.

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

US market
Stocks slipped in morning trading on Wall Street Monday to kick off a holiday-shortened week. The S&P 500 fell 0.4% as of 10:15 am Eastern. The tech-heavy Nasdaq fell 0.7%.

The Dow Jones Industrial Average fell 24 points, or 0.1%, to 33,725. The index held up better than the rest of the market largely because of a 7% jump by Walt Disney after the entertainment giant announced that it had ousted CEO Bob Chapek and brought back his predecessor, Bob Iger, to replace him.

Energy stocks were among the biggest losers in the broader market as US crude oil prices fell 4.4%. Exxon Mobil slipped 2.4%. Technology stocks also weighed down major indexes. Apple fell 1.6%.

European shares
European shares slipped on Monday, with economically sensitive sectors like mining and industrials leading the losses on worries about the impact of surging COVID-19 cases in China.

The pan-European STOXX 600 slipped 0.1% after the index marked its fifth straight weekly gain on Friday. The benchmark STOXX 600 has recovered nearly 13% since hitting this year's trough in September on better-than-expected earnings reports and hopes that the US Federal Reserve will shift to smaller rate hikes.

Tech View: Nifty forms long negative candle
Headline equity index Nifty today formed a long negative candle on the daily chart, indicating ongoing downward correction in the market. The index has been making lower highs on the daily scale the last three trading sessions.

“Now, it has to cross and hold above 18,200-18,250 zones, for an up move towards 18350 then 18444 zones whereas supports are placed at 18088 and 17950 zones,” said Chandan Taparia of Motilal Oswal.

Stocks showing bullish bias
Momentum indicator Moving Average Convergence Divergence (MACD) showed bullish trade setup on the counters of IOB, Orient Electric, Kajaria Ceramic, Equitas Holdings and Aether Industries among others.

The MACD is known for signalling 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 signalling weakness ahead
The MACD showed bearish signs on the counters of Kalpataru Power, Aegis Logistics, Caplin Point, SAIL, Vodafone Idea and PVR, 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
ICICI Bank (Rs 852 crore), RIL (Rs 754 crore), HDFC (Rs 725 crore), Bajaj Finance (Rs 715 crore), HDFC Bank (Rs 666 crore), Axis Bank (Rs 624 crore) and Tata Steel (Rs 616 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: 5.8 crore), ONGC (shares traded: 1.6 crore), NTPC (shares traded: 1.3 crore), Tata Motors (shares traded: 95 lakh), ICICI Bank (shares traded: 92 lakh), ITC (shares traded: 92 lakh) and SBI (shares traded: 74 lakh) were among the most traded stocks in the session on NSE.

Stocks showing buying interest
Shares of Bank Maharashtra, IOB, Central Bank, Escorts, PNB, Timken India and Union Bank India witnessed strong buying interest from market participants as they scaled their fresh 52-week highs, signalling bullish sentiment.

Stocks seeing selling pressure
Shares of Quess Corp, Greenpanel Industries, Bandhan Bank, Olectra Greentech, Sona BLW Precision Forgings, Delhivery and Motilal Oswal witnessed strong selling pressure and hit their 52-week lows, signalling bearish sentiment on the counters.

Sentiment meter favours bulls
Overall, the market breadth favoured bears as 2,172 stocks ended in the red, while 1,424 names settled with gains.

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