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

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NEW DELHI: Domestic equity indices saw a sharp selloff on Thursday, as slowing marginal growth spooked investors. India VIX spiked 11 per cent to rise above the 14 level, suggesting caution among traders.

Nifty fell below its immediate support range of 15,800-15,779, forming a bearish candle on the daily chart. Will the market see more selling pressure in the coming days?

Here’s how analysts read the market pulse:

Mazhar Mohammad at Chartviewindia.in said Nifty needs to sustain above the 15,680 level on Friday, as a close below that level could strengthen the bearish sentiments further. “Strength is unlikely unless the index closes above 15,900 level,” he said.

Shrikant Chouhan at Kotak Securities said Nifty has formed a lower top, which indicates further weakness from the prevailing level.

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

Growth worries drag Wall Street lower
Wall Street’s benchmark indices fell sharply on Thursday as the spread of the Covid-19 Delta variant casts dark clouds over economic recovery, while a rout in Chinese tech stocks appeared to have spilled across markets. At 10:03 a.m. ET, the Dow Jones was down 392.30 points, or 1.13 per cent, and the tech-heavy Nasdaq Composite was down 211.24 points, or 1.44 per cent.

European shares fall on recovery concerns
European stocks fell on Thursday, with cyclical sectors such as miners, automakers, and banks leading the declines, as global mood soured on economic recovery worries. The pan-European STOXX 600 index dropped 1.1%, on course for its biggest one-day selloff in nearly three weeks, after Asian markets tumbled on concerns about China’s recovery and tighter regulation on technology companies.

Tech View: Nifty50 forms bearish candle
Nifty50 saw selling from the word go on Thursday. It fell below the immediate support range of 15,800-15,779 with ease and eventually formed a bearish candle on the daily chart. Analysts said the bulls’ failure to take the index above the 15,900 level has triggered weakness. In case the index fails to recover, it may reach levels around the 15,635-600 zone, they said.

Check out the candlestick formations in the latest trading sessions

ETMarkets.com

F&O: Spike in VIX signals bearishness
India VIX moved up 11.06 per cent from 12.21 to 13.56 level. A sudden spurt in VIX from its multiple-month lows indicates some caution for short-term market action. On the options front, maximum Put open interest stood at 15,500 levels followed by 15,000 while maximum Call OI was at 16,000 followed by 15,800 levels.

Stocks showing bullish bias
Momentum indicator Moving Average Convergence Divergence (MACD) showed bullish trade setup on the counters of Hathway Cable, Texmaco Rail, Ambuja Cements, Gabriel India,

, Brigade Enterprises, VRL Logistics, BSE, FDC, Aditya Birla Money, Colgate Palmolive, Coforge, Bajaj Consumer Care, Sunteck Realty, Satin Creditcare, Inox Wind, UltraTech Cement, Tata Metaliks, L&T Technology Services, JMC Projects, HEG, 3P Land Holdings, Shriram City Union, Pearl Global Industry, DCM Nouvelle, Esab India and Bigbloc Construction.

The MACD is known for signalling trend reversals in traded securities or indices. When the MACD crosses above the signal line, it gives a bullish signal, indicating that the price of the security may see an upward movement and vice versa.

Stocks signalling weakness ahead
The MACD showed bearish signs on the counters of

, Canara Bank, Apollo Tyres, Sun Pharma, Sadbhav Infrastructure, ICICI Pru Life, Fortis Healthcare, CSB Bank, Dhampur Sugar, KPIT Technologies, Aptech, Man Industries, Shree Pushkar Chemicals, Omax Auto, Kalyani Steel, Clariant Chemicals, Thermax, Maral Overseas, P&G Hygiene & Health, Summit Securities, Rajdarshan Industry and Rajratan Global Wire. A bearish crossover on the MACD on these counters indicated that they have just begun their downward journey.

Most active stocks in value terms
Tata Motors (Rs 2,704.67 crore), Tata Steel (Rs 1,495.59 crore), Just Dial (Rs 1,234.57 crore), RIL (Rs 1,082.79 crore), SBI (Rs 919.54 crore), TCS (Rs 811.46 crore), ICICI Bank (Rs 696.44 crore), Bajaj Finance (Rs 694.87 crore), HDFC (Rs 678.30 crore) and HDFC Bank (Rs 642.66 crore) were among the most active stocks on Dalal Street in value terms. Higher activity on a counter in value terms can help identify the counters with the highest trading turnovers in the day.

Most active stocks in volume terms
Vodafone Idea (Shares traded: 18.60 crore), Suzlon Energy (Shares traded: 11.71 crore),

(Shares traded: 9.63 crore), Tata Motors (Shares traded: 8.74 crore), YES Bank (Shares traded: 6.85 crore), JP Power (Shares traded: 6.75 crore), BHEL (Shares traded: 6.39 crore), PNB (Shares traded: 6.05 crore), Bank of Baroda (Shares traded: 4.52 crore) and SAIL (Shares traded: 4.45 crore) were among the most traded stocks in the session.

Stocks showing buying interest
Rites, Sobha,

, Coforge and Tide Water Oil witnessed strong buying interest from market participants as they scaled their fresh 52-week highs, signalling bullish sentiment.

Stocks seeing selling pressure
India Pesticides and Uttam Galva Steels witnessed strong selling pressure and hit their 52-week lows, signalling bearish sentiment on these counters.

Sentiment meter favours bears
Overall, the market breadth remained in favour of the bears. As many as 155 stocks on the BSE500 index settled the day in the green, while 340 settled the day in the red.

Podcast: What spooked Dalal Street?

Sensex dropped 486 points on Thursday amid selling pressure in bank and metal stocks. What really spooked the D-Street? What are the Nifty charts suggesting? Will the market see more volatility in the coming days?