Ahead of Market: 12 things that will decide stock action on Monday - Economic Times

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NEW DELHI: Geopolitical tensions, inflation worries, and rising oil prices continued to weigh on market sentiments in Friday's session. Weakness is likely to continue for a while, said analysts.

Here's how analysts read the market pulse:

"Nifty50 found some cushion around the 17,500 level. If the index fails to hold above the 17,500 level support zone, an extension of time and price correction is likely. Traders for now should maintain a cautious-to-mild bullish outlook. The resistance for Nifty is placed at 18,300 level," said Yesha Shah, Head of Equity Research, Samco Securities.

Mazhar Mohammad of Chartviewindia.in said a pullback attempt can’t be ruled out in the next one or two trading sessions, as the sharp correction has dragged the index into the oversold zone.

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

Nasdaq post worst weeks since pandemic start
Wall Street's main indexes ended sharply lower on Friday as Netflix shares plunged after a weak earnings report, capping a brutal week for stocks that saw the S&P 500 and Nasdaq log their biggest weekly percentage drops since the onset of the pandemic in March 2020. The benchmark S&P 500 posted its third straight week of declines, ending 8.3 per cent down from its early January record high.

On Friday, the Dow Jones Industrial Average fell 450.02 points, or 1.3 per cent, to 34,265.37, the S&P 500 lost 84.79 points, or 1.89 per cent, to 4,397.94 and the Nasdaq Composite dropped 385.10 points, or 2.72 per cent, to 13,768.92.

European shares tumble in global selloff
European stocks slumped on Friday to mark the third week of losses as jitters over monetary policy tightening by central banks this year and weak economic data sparked steep declines across global equities. The pan-European STOXX 600 dropped 1.8 per cent, and was down 1.4 per cent over the week. Mining stocks were the day's worst performers, losing 3.3 per cent.

Tech View: Nifty forms indecisive 'Doji' candle
Despite a strong gap-down start, the Nifty50 on Friday managed to close almost where it opened for the day, forming an indecisive 'Doji' candle on the daily chart. The index took support from its 50-day moving average and settled the day above 17,600-500 range, a key support area analysts have been pointing out for the last couple of days. Even as the index has sent a 'sell' signal on the MACD indicator and is showing weakness on weekly charts, analysts do not rule out a comeback for the market next week.

F&O: What are OI in index signaling
Even as weakness is evident, on Friday Call options saw some accumulation of contracts at near-the-money counters. This signals that the bulls still see some turnaround happening now.

Stocks showing bullish bias
Momentum indicator Moving Average Convergence Divergence (MACD) showed bullish trade setup on the counters of Biocon, Solar Industries, Power Grid, MOIL, APL Apollo Tubes and Indo Count Industries.

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 signalling weakness ahead
The MACD showed bearish signs on the counters of Hindustan Zinc, Pidilite Industries, HDFC Bank, Colgate Palmolive, TCS and Relaxo Footwear. A bearish crossover on the MACD on these counters indicated that they have just begun their downward journey.

Most active stocks in value terms
Reliance Industries (Rs 1524 crore), Tata Elxsi (Rs 1520 crore), Infosys (Rs 1477 crore), TCS (Rs 1189 crore), Hindustan Unilever (Rs 1056 crore), HDFC (Rs 1019 crore) and Bajaj Finance (Rs 1015 crore) were among the most active stocks on Dalal Street in value terms. Higher activity on a counter in value terms can help identify the counters with the highest trading turnovers in the day.

Most active stocks in volume terms
Vodafone Idea (Shares traded: 17 crore), Suzlon Energy (Shares traded: 13 crore), YES Bank (Shares traded: 7 crore), SAIL (Shares traded: 5 crore), PNB (Shares traded: 5 crore) and Bank of Baroda (Shares traded: 4 crore) were among the most traded stocks in the session.

Stocks showing buying interest
ABB Power, Sharda Cropchem, Ingersoll Rand, Adani Transmission, Jindal Stainless, Sun Pharma Advanced Research and Power Grid witnessed strong buying interest from market participants as they scaled their fresh 52-week highs, signaling bullish sentiment.

Stocks seeing selling pressure
Strides Pharma, Spandana Sphoorty, IndiaMart InterMesh, Zydus Wellness, Indraprastha Gas, Cadila Healthcare and Jubilant Life witnessed strong selling pressure and hit their 52-week lows, signaling bearish sentiment on the counter.

Sentiment meter favours bulls
Overall, market breadth was in favour of losers as 1,016 stocks ended in the green, while 2,362 names settled with cuts.

Podcast: Can Fed meet, Budget make Nifty more volatile now?

The next two weeks are going to be crucial for the markets as two big events are lined up - Fed meeting outcome on January 26 and Union Budget on February 1. Should traders brace for more volatility ahead of the Fed meeting this week and the Union Budget next week? What is your take on the FPI outflow seen this month? Which sectors do you think could be the worst affected lot due to FPI selling?

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