Ahead of Market: 10 things that will decide D-Street action on Wednesday

Benchmark equity indices Sensex and Nifty ended almost flat in a see-saw trade on Tuesday as investors traded cautiously, awaiting cues from the US Federal Reserve’s policy stance. Foreign fund outflows and elevated levels of crude oil prices also weighed on investor sentiment, traders said.

Nifty ended below 19,700 levels after inching very close to 20,000 levels last week. Sectorally, PSU Bank pack emerged as the top laggard. From the Nifty pack, top gainers in a range-bound trade were stocks like Hindalco, Tata Steel, JSW Steel and UltraTech Cement.

Here’s how analysts read the market pulse:

“Indian indices hovered along the flat line, waiting ahead for the crucial decision of Fed policy. Metal stocks rose due to China’s commitment to provide policy support to its realty sector, while utilities were up in anticipation of demand & improvement in operating margin. The recent correction of the domestic market can be attributed to several factors, including muted start to Q1 results, a reversal in FII activity, a rising dollar index, and an increase in crude oil prices,” Vinod Nair, Head of Research at Geojit Financial Services, said.

“The short term movement of Nifty is choppy. Having placed at the support, there is a possibility of an upside bounce in the short term towards the immediate resistance of 19800-19850 levels in the coming sessions. The next support is placed at 19600 levels,” Nagaraj Shetti, Technical Research Analyst, HDFC Securities, said.

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

US market
The tech-heavy Nasdaq and the S&P 500 edged up amid choppy trading on Tuesday as investors geared up for quarterly earnings reports from megacap technology companies Alphabet and Microsoft, and a rate hike by the Federal Reserve.With the central bank on track for another 25-basis point interest rate hike on Wednesday, policymakers face a choice over how much weight to put on recent economic data.

At 9:49 a.m. ET, the Dow Jones Industrial Average was down 12.33 points, or 0.03%, at 35,398.91, the S&P 500 was up 6.07 points, or 0.13%, at 4,560.71, and the Nasdaq Composite was up 72.63 points, or 0.52%, at 14,131.49.

After logging its longest winning streak in over six years on Monday, the Dow edged lower in early trading, weighed down by a 1.7% slide in Boeing.

Four of the eleven major S&P 500 sectors advanced in early trading, led by a 1.3% gain in materials stocks tracking rising metal prices as investors cheered pledges of support in the readout from a Politburo meeting in China.

European shares
European shares edged higher on Tuesday with miners and luxury stocks in the lead after China pledged more support for its slowing economy, but mixed earnings reports limited further upside in markets.

The pan-European STOXX 600 index rose 0.2% after Asian stocks rallied on signs of more stimulus in China that would focus on boosting domestic demand.

Tech View: Small Negative Candle
A small negative candle was formed on the daily chart with minor lower shadow. Tuesday’s candle pattern was formed beside the similar candle of the previous session. Technically, this pattern indicates a choppy movement in the market with weak bias. Nifty is currently showing signs of slowing down of downside momentum and is placed at the support of 10 day EMA around 19650 levels.

Stocks showing bullish bias
Momentum indicator Moving Average Convergence Divergence (MACD) showed bullish trade on the counters of JSPL, TVS Motor, Bandhan Bank, Ambuja Cements and PFC 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 Suzlon Energy, YES Bank, PNB, ITC and Dish TV India 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
HDFC Bank (Rs 4737 crore), ICICI Bank (Rs 2910 crore), RIL( Rs 1499 crore), and ITC (Rs 2002 crore) and Kotak Bank (Rs 1493 crore) 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
Suzlon Energy (Shares traded: 27.65 crore), YES Bank (Shares traded: 11.25 crore), SJVN (Shares traded: 12.26 crore) and Tata Steel (Shares traded: 8.80 crore) were among the most traded stocks in the session on NSE.

Stocks showing buying interest
Shares of Jyothy Labs, Titagarh Wagons, Thermax, Ajanta Pharma and TVS Motor 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 Campus Activewear, UPL and SRF among others stocks hit their 52-week lows, signaling bearish sentiment on the counters.

Sentiment meter favours bears
Overall, market breadth favoured bears as 1,672 stocks ended in the green, while 1,877 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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