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

NEW DELHI: As Nifty ended above the 11,350 level on Friday, it formed a bearish candle on the daily chart.

Chandan Taparia of Motilal Oswal Financial Services said the major trend of the index remains positive, but it needs to surpass the recent swing highs to commence the next leg of rally.

Vinod Nair of Geojit Financial Services said the expectation of economic activity picking up and earnings normalising would have to translate into reality or at least show signs of it for the market to sustain the current momentum.

Shibani Sircar Kurian of Kotak Mutual Fund said at the margin, a few indicators such as traffic congestion, workplace mobility, car sales and property searches have inched up, showing signs of some improvement in the economy.

“From here on the pace of the improvement of economic indicators along with outcomes of a possible vaccine or a cure for Covid-19 would determine the market movement,” she said.

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

US stocks bounced on Friday
US stocks rose on Friday, lifted by strong economic data. Dow finished the session 190 points higher at 27,930, while S&P 500 advanced 0.34 per cent to 3,397, a new record closing high. The Nasdaq climbed 0.4% and ended at 11,311, also a record close.

Weak data dragged European shares

European stocks fell Friday, as sluggish economic data proved difficult to shrug off for investors. The Stoxx Europe 600 index erased an earlier gain to fall 0.4 per cent to 364, following a 1% drop in the prior session. The German DAX fell 0.9% and the French CAC dropped 0.7%, while the FTSE 100 slipped 0.5%.

Tech View: Bearish candle on Nifty chart

Nifty50 on Friday reclaimed the 11,350 mark, but formed a bearish candle on the daily chart, as the index gave up some of the opening gains. The NSE barometer, which stayed above its five-day moving average for the session, now faces resistance in the 11,440-540 zone, analysts said. Support for the index is seen at 11,360 level, they said.

F&O: Nifty trading zone at 11,500-11,600
India VIX fell 4.46 per cent to 19.70 level. Volatility is cooling down gradually on a week-on-week basis, which suggests a bullish stance and buy-on-decline strategy can continue in this market. Options data suggested a trading range between 11,200 level and the 11,500-11,600 zone in the coming few days.

Stocks showing bullish bias
Momentum indicator Moving Average Convergence Divergence (MACD) on Friday showed bullish trade setup on the counters of GMR Infrastructure, Power Grid, IDBI Bank, UCO Bank, Firstsource Solution, DCB Bank, TV18 Broadcast, Max Financial Services, Sterling and Wilson, BF Utilities, Cochin Shipyard, The Ramco Cements, Dalmia Bharat Sugar, Huhtamaki PPL, Gujarat Gas, Power Mech Projects, BASF India, Solara Active Pharma, Neuland Labs and Kirloskar Oil Engine, among others.

Stocks signalling weakness ahead
The MACD showed bearish signs on the counters of Tata Motors, Jaiprakash Power, Amara Raja Batteries, Balkrishna Industries, Cosmo Films, Amrutanjan Healthcare, Mastek, Majesco, Varun Beverages, Westlife Development, Motilal Oswal Financial Services, GTPL Hathway, Indoco Remedies, GlaxoSmithKline Pharma, Sasken Technologies and TTK Healthcare, among others.

Friday’s most active stocks
RIL (Rs 2444.86 crore) , ZEEL (Rs 1601.68 crore) , HDFC Bank (Rs 1563.60 crore) , SBI (Rs 1357.51 crore) , Divi’s Laboratories (Rs 1260.97 crore) , ICICI Bank (Rs 1260.58 crore) , Bharti Airtel (Rs 1139.33 crore) , NTPC (Rs 1134.58 crore) , Axis Bank (Rs 1103.74 crore) and Asian Paints (Rs 1100.12 crore) were among the most active stocks on Dalal Street on Friday in value terms.

Friday’s most active stocks in volume terms
BHEL (shares traded: 17.98 crore) , YES Bank (shares traded: 14.60 crore) , NTPC (shares traded: 10.78 crore) , GMR Infra (shares traded: 10.18 crore) , Vodafone Idea (shares traded: 10.09 crore) , ZEEL (shares traded: 8.23 crore) , Future Consumer (shares traded: 7.95 crore) , PNB (shares traded: 6.87 crore) , SBI (shares traded: 6.80 crore) and Tata Power (shares traded: 6.42 crore) were among the most traded stocks in the session.

Stocks seeing buying interest
BASF India, Alkyl Amines, Affle (India), Aarti Drugs and Indiabulls Ventures (PP) witnessed strong buying interest from market participants as they scaled their fresh 52-week highs on Friday signalling bullish sentiment.

Stocks seeing selling pressure
Max Healthcare Institute and Madhav Copper witnessed strong selling pressure in Friday’s session and hit their 52-week lows, signalling bearish sentiment on these counters.

Sentiment meter favours bulls
Overall, market breadth remained in favour of bulls. As many as 315 stocks on the BSE 500 index settled the day in green, while 182 settled the day in red.

A Nifty correction might not be coming

Strong FII inflows and hopes of another US stimulus have been driving the bulls, but they seem to be losing their vigour. More analysts are projecting a correction. How much merit do you see there? And if there is one coming, what can investors/traders do to protect their profits?