NEW DELHI: As Nifty took a breather on Thursday closing lower after six days of sharp rally, it formed a Doji kind of indecisive pattern on the daily charts. Analysts said the pause was largely on the expected lines, and the index may see further consolidation over the next few sessions.

Deepak Jasani of HDFC Securities said technically Nifty has made a lower top compared with Wednesday’s session, but did not close at the intraday low. “Nifty is continuing to give mixed signals after registering large gains over last 6 days. On further rise, it could face resistance in the 10,125-10,176 band while support exists in the 9,932-9,944 zone,” he said.

Vinod Nair of Geojit Financial Services said the market still seems to be forward looking, ignoring the recent quarterly earnings and economic data and anticipating a turnaround in the economy.

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

US stocks mixed despite recovery optimism

A rally in tech shares drove the Nasdaq index higher on Thursday, with weekly jobless claims dipping below 2 million for the first time since mid-March bolstering optimism around an economic rebound from the coronavirus-driven slump. At 7:27 pm (IST) the Dow Jones Industrial Average was down 13.07 points, or 0.05 per cent, at 26,256.82, the S&P 500 was down 2.74 points, or 0.09 per cent, at 3,120.13 and the Nasdaq Composite was up 21.04 points, or 0.22 per cent, at 9,703.95.

European shares rally on ECB stimulus

The euro and European shares rallied on Thursday while Italian borrowing costs fell sharply after the European Central Bank ramped up stiumulus to shore up an economy ravaged by the coronavirus pandemic. The ECB increased the size of its Pandemic Emergency Purchase Programme (PEPP) to 1.35 trillion euros ($1.52 trillion) from 750 billion euros and extended it until June 2021 at the earliest, with a pledge to reinvest proceeds until at least the end of 2022.

Tech View: Nifty charts signal indecision

Nifty bulls lost steam on Thursday after a six-day rally and formed a Doji candle on the daily chart, suggesting indecisiveness among traders. This was the first time in seven sessions that the index made a lower high-low formation, reflecting a pause in momentum. The Relative Strength Indicator (RSI) also turned southward from the overbought territory to reflect indecision.

Check out the candlestick formations in the latest trading sessions

F&O data signals time correction ahead

On Thursday, Nifty negated the higher highs and lows sequence of last six sessions and formed a small body candle on the daily chart. It may see some time correction or price consolidation before the next leg of the rally starts. Option data suggests a wider trading range for Nifty between 9,500 and 10,200 levels.

Stocks showing bullish bias

Momentum indicator Moving Average Convergence Divergence (MACD) on Thursday showed bullish trade setup on the counters of G M Breweries, Dr. Reddy’s Labs, Wockhardt, Balaji Telefilms, Suven Pharmaceutical, Alkem Laboratories, Albert David, Nahar Poly Films, Prajay Engineers, Ravi Kumar Distiller, Nirvikara Paper Mill, RS Software (India), Hisar Metal Industries, Bang Overseas, Gujarat Apollo Industries, Xelpmoc Design and T and Ambika Cotton Mills.

Stocks signalling weakness ahead

The MACD showed bearish signs on the counters of Info Edge (India), Capri Global Capital, Gujarat Sidhee Cement, Kirloskar Oil Engine, NACL Industries, Insecticides (India), Nath Bio-Genes, IFB Agro Industries, Lotus Eye Hospital, Sakar Healthcare and Lakshmi Finance. Bearish crossover on the MACD on these counters indicated that they have just begun their downward journey.

Most active stocks in value terms

Bajaj Finance (Numbers of shares traded: 3825.93 crore) , HDFC Bank (Numbers of shares traded: 2755.89 crore) , RIL (Numbers of shares traded: 2476.55 crore) , ICICI Bank (Numbers of shares traded: 2009.99 crore) , Axis Bank (Numbers of shares traded: 1824.93 crore) , Bharti Airtel (Numbers of shares traded: 1655.31 crore) , SBI (Numbers of shares traded: 1455.09 crore) , Aurobindo Pharma (Numbers of shares traded: 1446.87 crore) , HDFC (Numbers of shares traded: 1355.84 crore) and IndusInd Bank (Numbers of shares traded: 1081.20 crore) were among the most active stocks on Dalal Street on Thursday in value terms.

Most active stocks in volume terms

Vodafone Idea (Shares traded: 87.02 crore) , PNB (Shares traded: 12.71 crore), Trident (Shares traded: 11.47 crore), South Indian Bank (Shares traded: 9.33 crore), SBI (Shares traded: 8.35 crore), Tata Power (Shares traded: 8.18 crore) , Bank of Baroda (Shares traded: 7.22 crore), Tata Motors (Shares traded: 7.21 crore) , ICICI Bank (Shares traded: 5.71 crore) and Vedanta (Shares traded: 5.59 crore) were among the most traded stocks in the session.

Stocks seeing buying interest

Alok Industries, GMM Pfaudler, Cipla, Granules India and Aurobindo Pharma witnessed strong buying interest from market participants as they scaled their fresh 52-week highs on Thursday signalling bullish sentiment.

Stocks witnessing selling pressure

Rajesh Exports witnessed strong selling pressure in Thursday’s session and hit their 52-week lows, signalling bearish sentiment on these counters.

Sentiment meter favours bears

Overall, market breadth remained in favour of bears. As many as 225 stocks on the BSE 500 index settled the day in green, while 274 settled the day in red.

Podcast: Is D-Street going into consolidation >>>

The winning run for headline stock indices finally halted after six straight sessions, thanks to selling pressure in banking and financial stocks which were the key drivers of the recent rally. The 30-pack Sensex ended the day at 33,981, down 129 points, while Nifty settled below 10,050. Has the stocks rally lost steam? Is the market momentum due for change?

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