Rohit Singre, Senior Technical Analyst at LKP Securities said, “Going ahead, 14,500 will act as fantastic support in Nifty and holding above the said levels, we may see some more decisive move towards 14,600-14,700 zone. The Nifty Bank has witnessed a bullish flag breakout on the two-hour chart, which suggests Nifty Bank can outperform and see next move towards 32,500-32,700 zone.”
“The pace of the market rally continued despite RBI’s caution over elevated NPA levels in 2021, supported by PSU banks and auto stocks. Majority of the sectors traded in the green in anticipation of good quarterly results, while pharma and FMCG experienced some selling. US bond yield has changed its trajectory to a rising trend, which could impact EMs in the future. But FII inflows are strong and the dollar continues to be weak due to oversupply of USD led by the high amount of fiscal stimulus,” said Vinod Nair, Head of Research at Geojit Financial services.
That said, here’s a look at what some of the key indicators are suggesting for Wednesday’s action:
US stocks edge higher as focus turns to earnings season
Wall Street’s main indexes gained on Tuesday as investors looked to the earnings season this week for clues on the health of Corporate America and the economy while awaiting details on the next package of official economic stimulus. The Dow Jones Industrial Average rose 36.3 points, or 0.12%, to 31,044.69. The S&P 500 rose 6.9 points, or 0.18%, to 3,806.51, while the Nasdaq Composite rose 44.6 points, or 0.34%, to 13,080.94.
European shares steady as banks, oil sectors rise
European stocks inched higher on Tuesday on positive brokerage recommendations and gains in economically sensitive stocks on expectations of a larger U.S. stimulus under incoming president Joe Biden. The pan regional STOXX 600 index rose 0.04%, with oil and gas, travel and leisure and banking sectors leading the gains.
Tech View: Nifty50 forms a bullish candle
Nifty50 on Tuesday made higher highs for the 14th straight session and formed a bullish candle on the daily chart. Analysts said Nifty’s positive momentum can continue and it can look to take out the 14,750 level soon. They see support for the index in the 14,300-14,430 zone. “As long as Nifty sustains above 14,432 level, the momentum can stay strong. In that scenario, the bulls can extend their upward journey into the 14,690-750 zone,” said Mazhar Mohammad of Chartviewindia.in.
Check out the candlestick formations in the latest trading sessions
F&O: Rising VIX is a concern
India VIX rose 2.09% from 22.38 to 22.84 level. Volatility is moving up because of rising implied volatility in Calls and needs to cool down below 20 level to form a higher market base. There was Call unwinding at all immediate strike prices while minor Call writing was seen at 15,000 and Put writing at 14,500 and 14,400 levels. Options data suggested a wider trading range between 14,000 and 15,000 levels, as the immediate trading range stood between 14,300 and 14,800 levels.
Stocks showing bullish bias
Momentum indicator Moving Average Convergence Divergence (MACD) on Tuesday showed bullish trade setup on the counters of Punjab National Bank, Bank of Baroda, SBI, Coal India, TV18 Broadcast, JSW Energy, Rashtriya Chemicals, Bank of India, Tata Coffee, UCO Bank, Power Finance Corporation, Network 18 Media, Balrampur Chini, Graphite India, Va Tech Wabag, Nippon Life AMC, Oil India, Dishman Carbogen Amcis, Shoppers Stop, Reliance Industrial Infrastructure, PTC India Financial, Atul Auto, PPAP Automotive, Shivam Autotech, Bombay Burmah, Apollo Pipes, Supreme Petrochem, Chembond Chemicals, D P Wires, Jindal Drilling, Akash Infra-Projects and Jash Engineering.
Stocks signalling weakness ahead
The MACD showed bearish signs on the counters of IndusInd Bank, Adani Ports & SEZ, Asian Paints, Firstsource Solution, City Union Bank, L&T, PC Jeweller, Nava Bharat Ventures, Meghmani Organics, Astral Poly Technik, Bata India, Central Depository Services (CDSL),Navkar Corporation, KPIT Technologies, Nectar Lifesciences, Gati, Alembic Ltd, Surana Telecom, Kansai Nerolac Paint, SORIL Infra Resource, Balaji Telefilms, Ugar Sugar Works, ABB India, VIP Industries, Bharat Road Network, Trigyn Technologies, LG Balakrishnan & Bros, Deccan Cements, Lux Industries and Vaishali Pharma.
Tuesday’s most active stocks
Tata Motors (Rs 9302.03 crore), RIL (Rs 3674.60 crore), Asian Paints (Rs 1830.80 crore), Tata Steel (Rs 1735.60 crore), Bajaj Finance (Rs 1675.18 crore), HDFC Bank (Rs 1497.52 crore), DLF (Rs 1488.31 crore), Bharti Airtel (Rs 1420.69 crore), Eicher Motors (Rs 1396.64 crore) and SBI (Rs 1270.84 crore) were among the most active stocks on Dalal Street on Tuesday in value terms.
Tuesday’s most active stocks in volume terms
Tata Motors (Shares traded: 39.05 crore), Vodafone Idea (Shares traded: 38.87 crore), YES Bank (Shares traded: 31.96 crore), PNB (Shares traded: 18.35 crore), IDFC First Bank (Shares traded: 9.05 crore), Ashok Leyland (Shares traded: 8.36 crore), Bank of Baroda (Shares traded: 8.10 crore), South Indian Bank (Shares traded: 7.46 crore), GAIL (Shares traded: 6.51 crore) and GTL Infra (Shares traded: 5.65 crore) were among the most traded stocks in the session.
Stocks showing buying interest
JSW Energy, DLF, Tata Motors, Tata Motors (DVR) and IDFC First Bank witnessed strong buying interest from market participants as they scaled their fresh 52-week highs on Tuesday signalling bullish sentiment.
Stocks seeing selling pressure
Mrs Bectors Food Specialities, Fairchem Organics, Jump Networks, Valiant Organics and Vishal Fabrics witnessed strong selling pressure in Tuesday’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 275 stocks on the BSE 500 index settled the day in green, while 222 settled the day in red.
Podcast: Are D-Street valuations stretched? >>>
Dalal Street bulls flexed muscles for the third straight day as benchmark indices recorded new highs despite an early bout of selling. With a gain of 248 points on Tuesday, Sensex is less than 500 points away from the 50,000-mark, something unthinkable a few months ago. Nifty is also making new highs, registering a close above 14,500 on Tuesday for the first time. We caught up with Ajit Mishra of Religare Broking to know his views on market valuations.