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

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NEW DELHI: Domestic stock markets ended another week on a low note, falling 1.5% in the latest session and an overall drop of 4% during the week. Friday’s session wiped out around Rs 4 lakh crore from the investor pool.

Markets remain volatile in the short term, driven by rising inflation and interest rate concerns. Experts suggest investors to be cautious and stay light in the current market scenario.

Here is how analysts read the pulse of the market:-

Mazhar Mohammad of Chartviewindia.in declared a bear candle on the weekly charts, the fourth week in a row highlights the bear’s dominance in the market.

“Nifty appears to have taken support at the 16,350 level, before showing intraday consolidation. Normally, a Doji formation after a reasonable weakness alert regarding the upward trend reversal. Confirmation through a close lasting above the 16,500 level could open a bullish bounce in the market,” said Nagaraj Shetti of HDFC Securities.

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

US stocks: S&P 500, Nasdaq, Dow close negative

U.S. stocks fell on Friday and ended the week lower as investors took notice of a key report on the state of the labor market recovery, which underscored the still strong labor market conditions. The S&P 500 fell 0.6% on Friday to close at 4,123.67. The Nasdaq Composite fell 1.4%, ending at 12,144.66. The Dow fell just under 100 points to 32,901.08. A day earlier, the S&P 500 lost 3.6%, while the Nasdaq fell 5% for its worst day since June 2020. The Dow was down more than 1,000 points.

European stock markets fall
European markets fell on Friday, showing global caution after Wall Street recorded its worst day since 2020. The pan-European Stoxx 600 fell 1.6% at the close, with retail stocks losing 2% while almost all sectors and major exchanges ended in negative territory. Oil and gas stocks gained 0.7%. In the UK, the FTSE 100 fell as fears of runaway inflation and an impending economic slowdown weigh on global markets.

Tech View: Formed Indecisive Doji Candle
On Friday, the Nifty50 had an early gap, but avoided further dips to eventually form an indecisive Doji candle on the daily chart. The index is now trading below its major moving averages. Analysts said that while a small rebound cannot be ruled out, the lingering market pain is unlikely to subside in the near future.

F&O: the trend remains negative
The trend continues to remain negative and the ‘RSI’ oscillator on the daily chart is not yet in the oversold zone to attempt a reversal, said Ruchit Jain, Lead – Research, 5paisa.com.

“The ’20 EMA’ on the hourly chart has acted as resistance over the past few sessions which now sits around 16640 and is the hurdle to Nifty,” he added. “On the other hand, the bearish pattern gave a target projection of 16125 and therefore 16200-16125 would be a range to watch.”

Stocks Showing a Bullish Bias

The Momentum Moving Average Convergence Divergence (MACD) indicator showed a bullish trade setup on the counters of Power Grid, ABB India, Gujarat Gas, Cosmo Films, SMC Global, Jet Airways, Supreme Industries and Silver Touch Technologies.

The MACD is known to signal 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 upward movement and vice versa.

Stocks Signal Weakness Ahead

The MACD showed bearish signs on the counters of Indian Hotels, Apollo Tyres, Bombay Dyeing, Hindustan Unilever, Karanatak Bank, Biocon and DCM Shriram. A bearish crossover on the MACD on these counters indicated that they had just begun their downward journey.

Most active stocks by value

Reliance Industries (Rs 2,375.22 crore), Bajaj Finance (Rs 1,854.56 crore), HDFC Bank (Rs 1,766.90 crore), Axis Bank (Rs 1,050.67 crore), Tata Motors (Rs 1 032.49 crore), Infosys (Rs 952.60 crore) and ITC (Rs 913.82 crore) were among the most active stocks on NSE in terms of value. Higher activity on a counter in terms of value can help identify counters with the highest turnover for the day.

Most active stocks by volume

ITC (shares traded: 3.45 crore), Tata Motors (shares traded: 2.51 crore), NTPC (shares traded: 2.26 crore), ONGC (shares traded: 1.68 crore), SBI (shares traded: 1.67 crore), Axis Bank (shares traded: 1.55 crore) and Coal India (shares traded: 1.42 crore) were among the most traded stocks during the session on NSE.

Actions showing buying interest:

None of the stocks attracted strong buying interest from market participants as neither counter hit new 52-week highs, signaling bullish sentiment.

Stocks are under selling pressure

Dilip Buildcon, Info Edge, Nazara Technologies, Hindustan Copper, Infibeam Avenues, Strides Shasun and PNB Housing Finance witnessed heavy selling pressure and hit their 52-week lows, signaling bearish sentiment on the meters.

Sentiment meter favors bears
Overall, market breadth favored losers as 758 stocks ended in the green, while 2,615 names settled with cuts.

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