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

NEW DELHI: As Nifty ended below the 11,700 level on Thursday, it formed a bearish engulfing pattern candle on the daily chart.

Ajit Mishra of Religare Broking said, this fall has engulfed the gains of the last six sessions and derailed the momentum as well.

“We believe 11,600 would be the next critical support in Nifty. Considering the scenario, we suggest maintaining short positions also and limiting trades largely to the index majors. Besides, participants should keep a close watch on global developments for cues,” he said.

Mazhar Mohammad of said, in the next session, if Nifty slips below 11,661 levels, then the slide shall continue towards its initial target placed in the zone of 11,495–400 levels.

“However, if it manages to sustain above 11,661 levels on a closing basis, then it can slip into a consolidation phase for a couple of sessions but rallies towards the zone of 11,800–850 will remain vulnerable for a sell-off. Therefore, positional traders are advised to create shorts on rallies whereas intraday traders shall short below 11,661 levels and look for targets somewhere close to 11,500 levels,” he said.

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

US stocks fall after surprise rise in jobless claims
US stocks dropped on Thursday as an unexpected rise in weekly jobless claims compounded fears of a stalling economic recovery, against the backdrop of dimming hopes for more fiscal aid before the election. The Dow Jones Industrial Average was down 243.51 points, or 0.85%, at 28,270.49, the S&P 500 was down 34.60 points, or 0.99%, at 3,454.07. The Nasdaq Composite was down 166.55 points, or 1.42%, at 11,602.18.

European shares tumble 2% on Covid curbs
European shares hit two-week lows on Thursday, knocked by tougher curbs in London and Paris to fight a second wave of the COVID-19 pandemic, with no breakthrough in Brexit trade talks also a dampener. The pan-European STOXX 600 was down 2.1% to a near two-week low, with markets in London and Paris lower 2%-2.2% and Frankfurt and Milan 2.6%-2.7% weaker.

Tech View: Nifty50 forms Bearish Engulfing candle,
Nifty50 snapped a 10-day winning streak on Thursday and formed a large bearish candle on the daily chart that engulfed the past few candles, thus forming a Bearish Engulfing pattern. Such a pattern after a rally has negative implications. Analysts said the index did not respect its immediate support at the 11,800 level and felt that the 11,600-500 levels are a possibility in coming days. A move above the 11,750 level is a must for initial sign of strength on Nifty50, they said.

Check out the candlestick formations in the latest trading sessions

F&O: Spike in VIX signals choppy times for Nifty
India VIX moved up 9.14 per cent from 20.21 to 22.02 levels. A spike in VIX indicated a roller-coaster ride ahead for Nifty. Options data suggested a wider trading range between 11,400 and 12,000 levels, while the immediate trading range stood between 11,500 and 12,000 levels.

Stocks showing bullish bias
Momentum indicator Moving Average Convergence Divergence (MACD) on Thursday showed bullish trade setup on the counters of PetronetLNG, Paramount Commun, Pricol, Plastiblends Industries, TV Today Network and Tokyo Plast.

Stocks signalling weakness ahead
The MACD showed bearish signs on the counters of DLF, Tech Mahindra, Cipla, Adani Ports, Lupin, Arvind Ltd., Berger Paints, Havells India, InterGlobe Aviation, Prestige Estates, GSFC, Balrampur Chini, City Union Bank, PTC India Financial, Shree Digvijay, Kesoram Industries, Inox Leisure, Bliss GVS Pharma, Advanced Enzyme Tech, Zen Technologies, Simplex Infrastructures, Snowman Logistics, Capri Global Capital, Titagarh Wagons, Genus Power Infra, Onward Technologies, MCX, Vidhi Specialty Food, Ceat, Neuland Labs, Tribhovandas Bhimji, Siyaram Silk, Tata Communications, Page Industries, Gateway Distriparks, Banco Products, Sakar Healthcare, Banswara Syntex, Jash Engineering, Asahi Songwon Colors, Hatsun Agro, Nahar Spg Mills, Saregama India, Precision Wires and Lakshmi Finance among others.

Thursday’s most active stocks
Infosys (Rs 4994.55 crore), RIL (Rs 2071.76 crore), TCS (Rs 1827.99 crore), Bajaj Finance (Rs 1728.56 crore), HDFC Bank (Rs 1687.55 crore), ICICI Bank (Rs 1375.19 crore), Axis Bank (Rs 1372.23 crore), HCL Tech (Rs 1352.00 crore), Wipro (Rs 1336.86 crore) and Tata Steel (Rs 1206.97 crore) were among the most active stocks on Dalal Street on Thursday in value terms.

Thursday’s most active stocks in volume terms
Vodafone Idea (shares traded: 18.79 crore), Ashok Leyland (shares traded: 6.52 crore), Tata Motors (shares traded: 6.40 crore), YES Bank (shares traded: 5.40 crore), SBI (shares traded: 4.92 crore), Infosys (shares traded: 4.43 crore), Federal Bank (shares traded: 3.96 crore), Wipro (shares traded: 3.90 crore), Vedanta (shares traded: 3.49 crore) and ICICI Bank (shares traded: 3.42 crore) were among the most traded stocks in the session.

Stocks seeing buying interest
Oracle Finance, Asian Paints, SBI Card, Tata Elxsi and Hero MotoCorp witnessed strong buying interest from market participants as they scaled their fresh 52-week highs on Thursday signalling bullish sentiment.

Stocks seeing selling pressure
Coal India, Angel Broking, Globe Textiles (India), Mittal LifeStyle, Sumit Woods and Zee Learn 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 79 stocks on the BSE 500 index settled the day in green, while 419 settled the day in red.

Podcast: Is it the start of a correction in market rally? >>>
Stock market investors were left poorer by Rs 3.28 lakh crore in today’s crash. RIL, TCS and HDFC Bank together shed Rs 1.05 lakh crore in market value. Sensex snapped its 10-session winning streak as it tumbled more than 1,000 points, joining the brutal sell-off in world markets. We caught up with Rusmik Oza, head of fundamental research, Kotak Securities, to decipher what lies ahead for the market.

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