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Ahead of Market: 10 things that will decide stock action on Wednesday

As investors await the key US Federal Reserve interest rate decision due to be announced later in the week, Indian benchmarks ended in the red on the first trading day of the week. Nifty settled with a cut of 59 points at 20,133, while Sensex slipped 242 points to close at 67,597. Sectorally, it was a mixed session with PSU Bank emerging as the top performer with gains of over 3%, while Realty, Metal and Media settled with the most losses of over 1% each.

Here’s how analysts read the market pulse:
“Domestic markets relinquished their momentum as they anticipated a raft of policy rate decisions due this week. The investor’s confidence was also impacted by the expectations of a demand resurgence in China, combined with crude supply cuts. With the Fed rate hike fears back on the cards, as reflected in the elevated US bond yields, the markets await clarification from major central banks,” Vinod Nair, Head of Research at Geojit Financial Services, said.

“The Nifty index has been consolidating within a broad range, with notable call writing activity observed at higher levels. This suggests that market participants are cautious and have been selling call options to hedge against potential downward movements. The sideways trend in the index is expected to persist in the upcoming trading sessions. This is attributed to the anticipation of the outcome of the US Federal Reserve (US Fed) meeting, which is a significant event that can impact global financial markets. The index has support at the 20100 level and resistance at 20200. A break on either side of this range is likely to lead to trending moves, with potential implications for market direction,” Kunal Shah, Senior Technical & Derivative analyst at LKP Securities, said.

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

US market opens lower
Wall Street‘s main indexes opened lower on Tuesday ahead of the Federal Reserve’s policy meeting, with investors awaiting grocery delivery app Instacart’s Nasdaq debut to assess a potential recovery in the IPO market.

The Dow Jones Industrial Average fell 52.46 points, or 0.15%, at the open to 34,571.84. The S&P 500 opened lower by 8.12 points, or 0.18%, at 4,445.41, while the Nasdaq Composite dropped 60.79 points, or 0.44%, to 13,649.44 at the opening bell.

European shares
European shares edged higher on Tuesday in choppy trading as cautious investors awaited a slew of central bank decisions this week, while Germany’s DAX lagged regional peers as weakness in industrial stocks weighed.

The pan-European STOXX 600 index inched 0.2% up by 0817 GMT, while Germany’s DAX was flat.

Tech View: Small positive candle
A small negative candle was formed on the daily chart with minor upper and lower shadow. Technically, the current chart pattern indicates a ‘Bearish Tri-Star’ type candle pattern (three candle top reversal pattern), but not a classical one. Further weakness from here could confirm short term top reversal for the Nifty at 20222 levels.

Stocks showing bullish bias:
Momentum indicator Moving Average Convergence Divergence (MACD) showed bullish trade on the counters of South Indian Bank, PFC, Den Networks, IFCI and Restaurant Brands 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 SAIL, GAIL, IRB Infra, Federal Bank and IEX 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

MRF (Rs 108823 crore), Page Industries (Rs 40425 crore), Honeywell Automation (Rs 40051 crore), 3M India (Rs 30392 crore), and Shree Cements (Rs 26504 crore) among others 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
YES Bank (Shares traded: 49.34 crore), JP Power (Shares traded: 45.66 crore), Vodafone Idea (Shares traded: 44.93 crores), Central Bank (Shares traded: 32.85 crores) and UCO Bank (Shares traded: 31.84 crores) among others were among the most traded stocks in the session on NSE.

Stocks showing buying interest
Shares of KIOCL, IOB, UCO Bank, Punjab and Sind Bank and Central Bank among others witnessed strong buying interest from market participants as they scaled their fresh 52-week highs, signaling bullish sentiment.

Stocks seeing selling pressure
Shares of Penta Gold, Ratnaveer Precision, JB Chemicals, Dangee Dums and BKM Industries among others stocks that hit their 52-week lows, signaling bearish sentiment on the counters.

Sentiment meter favours bears
Overall, market breadth favoured bears as 1,693 stocks ended in the green, while 2,084 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)

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