NEW DELHI: As it snapped a four-day winning streak, Nifty on Wednesday formed a Bearish Engulfing Candle on the daily chart, which some analysts interpreted as a signal of trend reversal or beginning of a consolidation phase.

The good news is the 50-pack managed to hold the 10,300 level. It now has an immediate support around 10,050.

Vinod Nair of Geojit Financial Services said ahead of Thursday’s F&O expiry, the market is expected to remain volatile and investors are advised to keep booking profit.

Sahaj Agrawal of Kotak Securities said the broader market is showing early signs of weakness, indicating possibility of profit booking/consolidation. “The short term is expected to remain turbulent, while the medium term view remains intact as of now. Metals and auto stocks can be bought on corrections while midcap infra stocks can witness profit taking after significant gains,” he said.

Ajit Mishra of Religare Broking said the Nifty movement was on the expected lines, and it may now see some consolidation before the next directional move. “In the absence of any major event on the domestic front, participants should keep a close watch on the global markets for cues,” he said.

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

US shares slide on virus worries

Wall Street’s major indexes fell on Wednesday as investors weighed the risk to domestic economy from rising coronavirus cases and a worsening forecast of the damage from the pandemic. At 10:00 a.m. ET, the Dow Jones Industrial Average was down 385.20 points, or 1.47 per cent, at 25,770.90, the S&P 500 was down 41.54 points, or 1.33 per cent, at 3,089.75, and the Nasdaq Composite was down 109.97 points, or 1.09 per cent, at 10,021.40.

European shares hit by virus fears

European stocks fell from a two-week high on Wednesday as investors turned cautious following a surge in the number of coronavirus cases globally. The pan-European STOXX 600 fell 1.5 per cent, with the economically sensitive sectors such as travel & leisure, automakers and banks leading declines.

Tech View: Nifty signalling change of trend

Nifty formed a Bearish Engulfing candle on the daily chart on Wednesday. Arun Kumar of Reliance Securities said this pattern usually indicates a change in trend ‘from bullish to bearish or a consolidation’. “A negative close on Thursday will confirm this pattern. The immediate support for Nifty50 stood at 10,050,” he said.

Check out the candlestick formations in the latest trading sessions


F&O: Nifty’s new range 10,100-10,500

In monthly options, maximum Put open interest was seen at 10,000 followed by 9,500 levels, while maximum Call OI stood at 10,500 followed by 10,600 levels. Meaningful Call writing was seen at 10,500 followed by 10,400 levels, while there was minor Put writing at 10,100 followed by 10,150 levels. Options data suggested a trading range between 10,100 and 10,500 levels.

Stocks showing bullish bias

Momentum indicator Moving Average Convergence Divergence (MACD) on Wednesday showed bullish trade setup on the counters of IFCI, L&T, Dabur India, IOL Chemicals, Jubilant Foodworks, Page Industries, Gallantt Ispat, Godfrey Phillips, Clariant Chemicals, Chemfab Alkalis, Kothari Petrochem, Atlanta, IndiaMART InterMESH, Electrotherm, Vipul, Anik Industries and TTK Prestige.

Stocks signalling weakness ahead

The MACD showed bearish signs on the counters of Hindalco Industries, United Spirits, Lemon Tree Hotels, Bharat Forge, Rico Auto Industries, Bhansali Engg, Gujarat Gas, HSIL, The Ramco Cements, Rites, UFO Moviez India, Filatex India, Thomas Cook, Sonata Software, Texmaco Rail, India Glycols, Eveready Industries, Tata Elxsi, Nelcast, Kaveri Seed Company, Sumitomo Chemical, Panacea Biotec, Ramky Infrastructure, Bombay Burmah and Navin Fluorine, among others.

Most active stocks in value terms

Bajaj Finance (Rs 6050.45 crore) , RIL (Rs 4138.68 crore) , IndusInd Bank (Rs 2164.12 crore) , ICICI Bank (Rs 2094.32 crore) , HDFC Bank (Rs 2055.96 crore) , Asian Paints (Rs 2039.80 crore) , RBL Bank (Rs 1729.70 crore) , Axis Bank (Rs 1460.17 crore) , SBI (Rs 1415.16 crore) and Tata Motors (Rs 1352.79 crore) were among the most active stocks on Dalal Street in value terms.

Most active stocks in volume terms

Vodafone Idea (Shares traded: 52.17 crore) , BHEL (Shares traded: 21.50 crore) , South Indian Bank (Shares traded: 13.85 crore) , Bank of Baroda (Shares traded: 13.50 crore) , Tata Motors (Shares traded: 12.53 crore) , Uttam Value Steel (Shares traded: 9.27 crore) , RBL Bank Ltd. (Shares traded: 8.84 crore) , Suzlon Energy (Shares traded: 7.84 crore) , SBI (Shares traded: 7.45 crore) and PNB (Shares traded: 7.04 crore) were among the most traded stocks in the session.

Stocks seeing buying interest

Ruchi Soya Industries, Infibeam Avenues, Alok Industries, Rallis India and Escorts witnessed strong buying interest from market participants as they scaled their fresh 52-week highs on Wednesday signalling bullish sentiment.

Sentiment meter favours bears

Overall, market breadth remained in favour of bears. As many as 140 stocks on the BSE 500 index settled the day in green, while 358 settled the day in red.

Podcast: Has Nifty finally halted the rally? >>>

Nifty50 on Wednesday formed a “Bearish Engulfing” pattern on the daily charts. This formation usually indicates a change in trend from bullish to bearish or a consolidation. So has the domestic market finally hit a hurdle? Will it now go into a downturn or consolidate?

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