Aditya Agarwala, Senior Technical Analyst, YES Securities, said, “A sustained trade above 61.8% Fibonacci retracement level of the entire fall, i.e., 13,535 can trigger more short covering rallies taking the index back to levels of 13,580-13,650. However, failure to breakout of the 61.8% Fibonacci resistance may resume the corrective phase, dragging the Nifty lower to levels of 13,400-13,320.”
“Market took an unexpected positive momentum in the afternoon, during a see-saw trading day, following the positive opening of the European market, which recovered from yesterday’s sell-off. Volatility is expected to stay high in the near term due to strict lockdown impacting economic recovery. However, the market is expected to remain bullish in the medium to long term, backed by overall progress in economic activity in 2021,” said Vinod Nair, Head of Research, Geojit Financial Services.
That said, here’s a look at what some of the key indicators are suggesting for Wednesday’s action:
US stocks gain on stimulus optimism
The Nasdaq gained on Tuesday, propped up by Apple on an exclusive report that it was planning car and battery production, as well as the approval of a coronavirus stimulus package. The Dow Jones Industrial Average fell 86.25 points, or 0.29% to 30,130.27. The S&P 500 was trading flat at 3,694.94, while the Nasdaq Composite gained 70.70 points, or 0.55%, to 12,813.08.
European shares rebound on US stimulus hopes
European shares rose on Tuesday as the approval of a US stimulus package helped allay worries of a further dent to the global economy from a new coronavirus strain in the UK. The pan-European STOXX 600 index rose 1%, recovering from a more than 2% slide in the previous session, which was also its biggest one-day drop in nearly two months.
Tech View: Nifty chart has bullish pattern
After wild swings, Nifty50 formed a Bullish Harami kind of pattern on the daily chart on Tuesday, indicating the likely continuation of bullish sentiment. But analysts said it is too early to confirm the trend. Shrikant Chouhan, Executive Vice President of Equity Technical Research at Kotak Securities, said for the positive momentum to continue, Nifty50 needs to sustain above 13,550 level.
Check out the candlestick formations in the latest trading sessions
F&O: Falling VIX signals bounceback ahead
India VIX fell 5.20 per cent from 23.19 to 21.98 levels. A cooldown in volatility from higher levels has provided support for a decent bounceback move, and it now has to hold below the 19 mark to help the bulls continue their grip on the market. There was marginal Call writing at strike prices 14,000 and 13,700 and Put writing at 13,000 and then 13,400 levels Options data suggested a broader trading range between 13,000 and 13,750 levels.
Stocks showing bullish bias
Momentum indicator Moving Average Convergence Divergence (MACD) on Tuesday showed bullish trade setup on the counters of MindTree and Atul Ltd.
Stocks signalling weakness ahead
The MACD showed bearish signs on the counters of YES Bank, Jaiprakash Power Ventures, DLF, NMDC, UPL, Karur Vysya Bank, Shree Renuka Sugars, SJVN, Arvind Ltd, Gujarat Mineral Development Corporation, Godrej Properties, NOCIL, Gujarat Gas, HEG, Rana Sugars, Cyient, Avenue Supermarts, Britannia, Dhampur Sugar, Arvind Fashions, DCM Shriram, Mishra Dhatu Nigam, Hindustan Oil Exploration Company, ABB India, Himatsingka Seide, Kaveri Seed Company, Reliance Capital and Varun Beverages.
Tuesday’s most active stocks
Bajaj Finance (Rs 2713.26 crore), RIL (Rs 2495.75 crore), IndusInd Bank (Rs 1829.30 crore), Tata Motors (Rs 1776.11 crore), ICICI Bank (Rs 1602.76 crore), HDFC Bank (Rs 1559.87 crore), Infosys (Rs 1308.52 crore), SBI (Rs 1301.19 crore), HDFC (Rs 1158.29 crore) and Axis Bank (Rs 1154.73 crore) were among the most active stocks on Dalal Street on Tuesday in value terms.
Tuesday’s most active stocks in volume terms
Vodafone Idea (Shares traded: 37.94 crore), YES Bank (Shares traded: 28.49 crore), PNB (Shares traded: 11.85 crore), Tata Motors (Shares traded: 11.00 crore), Federal Bank (Shares traded: 6.74 crore), ONGC (Shares traded: 5.86 crore), Canara Bank (Shares traded: 5.81 crore), BHEL (Shares traded: 5.72 crore), Bank of Baroda (Shares traded: 5.27 crore) and SBI (Shares traded: 5.12 crore) were among the most traded stocks in the session.
Stocks showing buying interest
Birlasoft, L&T Infotech, Persistent Systems, HCL Tech and Infosys witnessed strong buying interest from market participants as they scaled their fresh 52-week highs on Tuesday signalling bullish sentiment.
Stocks seeing selling pressure
Supreme Engineering, Ravinder Heights, Jump Networks, Jiya Eco-Products, D. P. Abhushan witnessed strong selling pressure in Tuesday’s session and hit their 52-week lows, signalling bearish sentiment on these counters.
Sentiment meter favoured bulls
Overall, market breadth remained in favour of bulls. As many as 330 stocks on the BSE 500 index settled the day in green, while 165 settled the day in red.
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Benchmark equity indices witnessed a volatile session on Tuesday, with Sensex closing above the 46,000 mark after a wild swing of nearly 1,000 points in intra-day trade. Sensex added 453 points to close at 46,007 points, while peer Nifty climbed 138 points to 13,466 points.