Ahead of Market: 12 things that will decide stock action on Tuesday

Ahead of Market: 12 things that will decide stock action on Tuesday

NEW DELHI: Nifty touched its all-time high of 14,147.95 in intraday trade on Monday and formed a ‘Hanging man‘ pattern on the daily chart, which generally signals towards a rally losing its steam. The headline index continued its winning steak to ninth consecutive session as many previous sessions marked indecisive formations, which suggests continous ‘profit booking’ and ‘buy on dips’ trend in the market.

According to Sneha Seth, Derivatives Analyst at Angel Broking, maximum open interest concentration remains intact at 14,000 Put and 14,200 Call options. Considering the above data points, she expects further upside towards 14,200-14,250 in the coming session. On the downside, 13,900-14,000 is a very strong demand zone.

“We remain cautiously optimistic on the market and suggest continuing with the “buy on dips” approach until we see a reversal in the trend. Going ahead, earnings, global cues and progress on vaccine drive will dictate the trend,” said Ajit Mishra, VP – Research, Religare Broking.

That said, here’s a look at what some of the key indicators are suggesting for Tuesday’s action:
US stocks begin 2021 on a muted note

The Dow kicked off 2021 on a muted note on Monday, as the rally that was built on hopes of a vaccine-driven recovery in the global economy faded. The Dow Jones Industrial Average fell 289.26 points, or 0.95%, to 30,317.22, while the S&P 500 was down 22.72 points, or 0.60%, at 3,733.35. The Nasdaq Composite, too, fell 30.63 points, or 0.23%, to 12,858.22.

European shares kick off 2021 with rally
European shares rallied in the first trading session of the year on Monday, as a landmark Brexit trade deal and coronavirus vaccination campaigns across the continent bolstered expectations of a strong economic rebound. The pan-regional STOXX 600 index gained 0.98% to touch fresh February 2020 highs, with economically sensitive mining and travel & leisure stocks jumping more than 3%.

Tech View: Nifty forms Hanging Man
Nifty50 on Monday extended the gains, but negated a higher low that it was making for eight sessions. The index formed a ‘Hanging Man’ candle on the daily chart, that usually suggests exhaustion of the ongoing momentum. Analysts said the price chart is looking extremely bullish and one should not expect weakness in Nifty50 unless it breaches the critical short-term support at 13,950 level on a closing basis.

Check out the candlestick formations in the latest trading sessions


F&O: Rising VIX is a worry
India VIX moved up 2.40% from 19.56 to 20.03 level. Volatility needs to sustain below 20 level to support the bullish market setup and fuel the bulls with a higher market base. On the options front, maximum Put open interest stood at 13,000 level followed by 13,500, while maximum Call OI was seen at 14,000 followed by 14,500 levels. Options data suggested a wider trading range between 13,700 and 14,500 levels, while the immediate trading range is seen between 13,900 and 14,300 levels.

Stocks showing bullish bias
Momentum indicator Moving Average Convergence Divergence (MACD) on Monday showed bullish trade setup on the counters of Ashok Leyland, IDFC First Bank, Federal Bank, Bharat Electronics, NHPC, DLF, Orient Green Power, Greaves Cotton, MothersonSumi Systems, GSFC, Container Corporation of India, Jain Irrigation, Orient Paper Mills, Greenply Industries, Grasim Industries, Electrosteel Castings, Cineline India, Time Technoplast, Sterling and Wilson, TVS Motor Company, ICICI Lombard General Insurance, Divi’s Lab, Radico Khaitan, HDFC AMC, Ceat Ltd, Taj GVK Hotels & Restaurants, Aegis Logistics, Ramco Industries and Finolex Industries.

Stocks signalling weakness ahead
The MACD showed bearish signs on the counters of HDFC Bank, Titan Company, Godrej Properties, Central Depository Services (CDSL), Century Plyboards, NRB Bearings, EID Parry, D-Link (India), Westlife Development, Shalimar Paints, Ramky Infrastructure, Golden Tobacco, Aurionpro Solutions, V Mart Retail, Tasty Bite, Rane Brake Lining and Rane Engine Valve.

Monday’s most active stocks
Tata Steel (Rs 2573.29 crore), RIL (Rs 2242.70 crore), TCS (Rs 1532.99 crore), Bajaj Finance (Rs 1223.96 crore), Tata Motors (Rs 1222.74 crore), HDFC Bank (Rs 1115.11 crore), Infosys (Rs 921.40 crore), SBI (Rs 885.00 crore), Axis Bank (Rs 881.15 crore) and ICICI Bank (Rs 877.23 crore) were among the most active stocks on Dalal Street on Monday in value terms.

Monday’s most active stocks in volume terms
Vodafone Idea (Shares traded: 64.96 crore), YES Bank (Shares traded: 21.48 crore), PNB (Shares traded: 21.36 crore), RattanIndia Power (Shares traded: 17.58 crore), Trident Ltd (Shares traded: 15.53 crore), BHEL (Shares traded: 13.89 crore), SAIL (Shares traded: 9.62 crore), Ashok Leyland (Shares traded: 7.03 crore), Vikas Multicorp (Shares traded: 6.87 crore) and Tata Motors (Shares traded: 6.40 crore) were among the most traded stocks in the session.

Stocks showing buying interest
Trident Ltd, Tata Steel (PP), Tata Steel, Cholamandalam Investment and Finance and Sterlite Tech witnessed strong buying interest from market participants as they scaled their fresh 52-week highs on Monday signalling bullish sentiment.

Stocks seeing selling pressure
Mrs. Bectors Food Specialities, Vishal Fabrics witnessed strong selling pressure in Monday’s session and hit their 52-week lows, signalling bearish sentiment on these counters.

Sentiment meter favours bulls
Overall, market breadth remained in favour of bulls. As many as 363 stocks on the BSE 500 index settled the day in green, while 131 settled the day in red.

Podcast: How will companies’ Q3 report cards turn out? >>>
TCS and Infosys contributed the most to Sensex’s gains as the benchmark equity index scaled the 48,000 mark for the first time. Sensex ended at 48,177 with a gain of 308 points, while Nifty closed at 14,133 points. The market breadth was positive, with gainers turning out to be double the number of losers on the BSE. We spoke to Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in, to discuss what lied ahead for the market.

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