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

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

Sensex had rallied as much as 478 points at the peak point, but gave up much of it to end flat.

Three steps forward, two steps backward: that’s how the domestic equity market has moved over the past two days. The best part is, the market has at least started closing higher. These are signs that the bulls are fighting real hard to make a comeback.

And as incremental flow of bad news slows down, growth support comes in from global central banks and the bulk of the crisis seems to have panned out, analysts have started talking of hopes again.

“Our prognosis is that the support is already here, the bulk of the crisis has happened and in a 12-month kind of view, probably things could be better,” Rana B Gupta, Managing Director for Indian Equities at Manulife Asset, said of his outlook for global equities.

On Dalal Street, Sensex had rallied as much as 478 points at the peak point, but later gave up much of it to end just 61 points higher. Nifty maintained positive bias throughout the session and ended marginally higher by 0.2% at 11,269.

“Once Nifty decisively closes above 11,350 the process of recovery is likely to materialise and the index is likely to test the 11,550 level on the upside. Fresh positional shorts should be avoided as the index is quite oversold and is nearing an important support zone,” said Manav Chopra, Head of Research for Equity at Indiabulls Securities.

Analysts attributed the bounce to the recent rate cut by Fed and IMF’s $50 billion pledge to combat the coronavirus. “We maintain our cautious view on Indian market and expect volatility to remain high in the near term. Updates on the spread of coronavirus would be the single biggest factor dictating global as well as domestic market trend for sometime,” said Ajit Mishra, VP for Research at Religare Broking

European markets trading in the red (8 PM IST)
Europe’s major stock markets sank again on Thursday, ignoring rallies elsewhere, as investors focussed on the rapid spread of novel coronavirus outside China and more turbulence for airlines.

US Markets: Dow Jones sinks 700 pts at open (8 PM IST)
US stock indexes opened sharply lower on Thursday as deaths from the coronavirus rose in the United States, forcing California to declare a state of emergency, while crippled travel demand hit airline stocks.

Signals from F&O data
On the options front, maximum Call open interest was at 12,000 and then 11,800 strike, while maximum Put OI was at 11,000 and then 11,300 strike. Marginal Call writing was seen at 11,600 and then 11,300 strike, while Put writing was at 11,000 strike. Options data indicates a broader trading range between 11,000 and 11,500 levels.

Tech charts signalling indecisiveness
Nifty on Thursday formed a Small Red Candle on the daily chart as it closed the day at 11,269 with minimal gain of 18 points. The index has moved in a tight range of 11,000 points on the downside and 11,450 points on the higher side. Until it sees a breakout on either side, it may trade in the said range. Nifty’s immediate support is near the 11,180-11,075 zone and resistance in the 11,340-11,440 zone. Nifty Bank closed the day at 28,815 with a gain of 162 points, and forming a Doji Candle pattern, which suggested indecision. Support for Nifty Bank stood near the 28,600-28,400 zone and resistance in the 29,200-29,250 zone,” said Rohit Singre, Senior Technical Analyst at LKP Securities.

Stocks showing bullish bias
Momentum indicator Moving Average Convergence Divergence or MACD on Thursday showed bullish trade setup on the counters of YES BankNSE 25.60 %, Sun Pharma, Oriental Bank of Commerce, Bandhan Bank, Indian Overseas, Britannia, Eicher MotorsNSE 3.02 %, Kajaria Ceramics and others. The list also included Responsive Industrie, 3M India, BF Investment, Aavas Financiers, Johnson Controls-Hit, Bhagyanagar India, SORIL Infra Resource, Sutlej Textiles, Arvind SmartSpaces, Indian Terrain Fashi, De Nora India, The Investment Trust and Deccan Cements.

The MACD is known for signalling trend reversals in traded securities or indices. It is the difference between the 26-day and 12-day exponential moving averages. A nine-day exponential moving average, called the signal line, is plotted on top of the MACD to reflect ‘buy’ or ‘sell’ opportunities. 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.

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Stocks signalling weakness ahead
The MACD showed bearish signs on the counters of Tube Investments, Century Plyboards, Max India, Metropolis Healthcar, Fairchem Speciality, Prime Focus, Manaksia, RS Software (India), Dollar Industries, Siyaram Silk and DIC India. Bearish crossover on the MACD on these counters indicated that they have just begun their downward journey.

Most active stocks in value terms
SBI (Rs 4,270.90 crore), YES Bank (Rs 2,731.25 crore), RIL (Rs 1,850.89 crore), Indiabulls Housing Finance (Rs 1,178.23 crore), HDFC Bank (Rs 1,129.69 crore), Tata Motors (Rs 1,110.16 crore), Indian Railway Catering & Tourism Corporation (Rs 1,102.42 crore), HDFC (Rs 863.93 crore), ICICI BankNSE -0.76 % (Rs 843.42 crore) and Kotak Bank (Rs 835.25 crore) were among the most active stocks on Dalal Street on Thursday 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
YES Bank (number of shares traded 78.46 crore), Idea CellularNSE 0.00 % ( 33.77 crore), SBI (14.92 crore), Tata Motors ( 8.78 crore), Indiabulls Housing Finance (4.08 crore), SAIL (3.66 crore), Ashok LeylandNSE -0.90 % (3.35 crore), NCC (3.05 crore), PNB (2.91 crore) and Bank of Baroda (2.76 crore) were among the most traded stocks in Thursday’s session.

Stocks showing buyers’ interest
Pidilite Industries, Divi’s Laboratories, Dabur India, Nestle India and Ajanta Pharma witnessed strong buying interest from market participants as they scaled their fresh 52-week highs on Thursday, signalling bullish sentiment.

Stocks seeing selling pressure
Future Lifestyle Fashion, Indian Hotels, Future Retail, Emami and Varroc Engineering witnessed strong selling pressure in Thursday’s session and hit their 52-week lows, signalling bearish sentiment on these counters.