Manish Hathiramani, technical analyst at Deen Dayal Investments said, “The support range of 14,750 (for Nifty50) was disrespected and we dropped over 200 points once that level broke. Keeping a stop loss at 14,900, traders can target 14,350-14,400 as a potential target for the index. Until we do not get past 14,900, the short to medium-term trend remains bearish.”
“Indications are now pointing towards further slide in the index, while volatility is likely to remain high due to the scheduled expiry of March month contracts. We reiterate our bearish yet cautious view and suggest maintaining positions on both sides,” said Ajit Mishra, VP – Research at Religare Broking.
That said, here’s a look at what some of the key indicators are suggesting for Thursday’s action:
Financials lift US stocks
The S&P 500 and the Dow rose on Wednesday as economy-linked financial and energy stocks gained amid another day of testimonies from Fed Chair Jerome Powell and Treasury Secretary Janet Yellen. The Dow Jones Industrial Average was up 303.91 points, or 0.94%, at 32,727.06, and the S&P 500 was up 18.78 points, or 0.48%, at 3,929.30. The Nasdaq Composite was down 27.73 points, or 0.21%, at 13,199.97.
European shares slip on new lockdowns measures
European stocks slipped on Wednesday, as concerns about new lockdown measures overshadowed a surprise return to economic growth for the euro zone in March. After falling as much as 0.7% in early morning trading, the pan-European STOXX 600 index was down 0.02%.
Tech View: Nifty breaks below 10-week EMA
Nifty50 on Wednesday slipped below its 50-day exponential moving average (EMA) and also its 10-week EMA to close at around 14,550 level. The index formed a bearish candle on the daily chart and negated the higher lows after three straight days. Analysts see weakness ahead. Nagaraj Shetti of HDFC Securities said the formation of the High Wave-type candle pattern of Tuesday has turned out to be a reversal pattern, as of now.
Check out the candlestick formations in the latest trading sessions
F&O: VIX spike signal weakness
India VIX rose 8.69% from 20.66 to 22.45 level. VIX has to cool down below 20 level for the bullish grip to continue and the market move to get smoother. On the options front, maximum Put Open Interest was seen at 14,000 level followed by 14,500, while maximum Call OI is at 15,000 followed by 15,300 level. There was Call writing at 14,700 and then 14,600, while marginal Put writing was seen at 14,300 and then 14,350 levels. Options data suggested a lower trading range between 14,350 and 14,800 levels.
Stocks showing bullish bias
Momentum indicator Moving Average Convergence Divergence (MACD) on Wednesday showed bullish trade setup on the counters of Tilaknagar Industries, Aarti Industries, Tata Consumer Products, Sequent Scientific, Prism Johnson, Aditya Birla Fashion, Rallis India, Heidelberg Cement, Globus Spirits, eClerx Services, Tera Software and N K Industries.
Stocks signalling weakness ahead
The MACD showed bearish signs on the counters of IDBI Bank, 3i Infotech, Subex, Edelweiss Financial Services, Welspun Corp, Escorts, Gati, Dalmia Bharat, Quick Heal Technologies, Andhra Cement, S Chand & Company, Jindal Poly Films, Hi-Tech Pipes, Saregama India, Vardhman Textiles, Vadilal Industries, 5Paisa Capital, Oriental Carbon and Shiva Texyarn.
Wednesday’s most active stocks
Adani Enterprises (Rs 2425.40 crore), Tata Motors (Rs 1842.88 crore), RIL (Rs 1596.11 crore), Adani Ports SEZ (Rs 1541.79 crore), SBI (Rs 1538.85 crore), Tata Steel (Rs 1500.26 crore), ICICI Bank (Rs 1396.61 crore), HDFC Bank (Rs 1218.74 crore), Axis Bank (Rs 1024.37 crore) and Asian Paints (Rs 1012.83 crore) were among the most active stocks on Dalal Street on Wednesday in value terms.
Wednesday’s most active stocks in volume terms
PNB (Shares traded: 11.81 crore), Vodafone Idea (Shares traded: 9.83 crore), Reliance Power (Shares traded: 7.03 crore), Tata Motors (Shares traded: 6.15 crore), YES Bank (Shares traded: 5.99 crore), Bank of Baroda (Shares traded: 5.36 crore), Tata Power (Shares traded: 4.96 crore), JP Power (Shares traded: 4.56 crore), Rail Vikas Nigam (Shares traded: 4.54 crore) and BHEL (Shares traded: 4.26 crore) were among the most traded stocks in the session.
Stocks showing buying interest
Orchid Pharma, CG Power & Industrial Solutions, Adani Power, Adani Gas and Aarti Industries witnessed strong buying interest from market participants as they scaled their fresh 52-week highs on Wednesday signalling bullish sentiment.
Stocks seeing selling pressure
Future Lifestyle Fashions, Global Education, Jump Networks, Ravinder Heights, Sanwaria Consumer, Jiya Eco-Products and B.C. Power Controls witnessed strong selling pressure in Wednesday’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 88 stocks on the BSE 500 index settled the day in green, while 411 settled the day in red.
Podcast: Will upside remain capped for Nifty? >>>
Wednesday was the seventh day of fall for domestic indices in the last 10 sessions. While rising virus cases in India was a concern, weakness across global markets also weighed heavily on the sentiment, a day ahead of the March series F&O expiry. Sensex plummeted 871 points and closed below 49,200. The NSE Nifty fell 1.8 per cent to close below 14,550 level. We spoke to Binod Modi, Head of Strategy at Reliance Securities to share his views on the market.