“Nifty has approached a trendline drawn from the previous crucial swing lows. All these parameters offered some support to the index. These parameters are in the 14,200-14,300 range. Unless this range is broken on a closing basis, the index can still stay in a consolidation phase. The new short-term range for the index will be in the 14,200-14,700 range,” said Gaurav Ratnaparkhi of Sharekhan.
“Implications to the banking and discretionary sectors are presumed to be the highest, drifting the market to defensives like IT, pharma and FMCG. This trend may happen for a couple of trading weeks; down a few weeks, Covid cases are likely to reduce, bringing growth back,” 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 Tuesday’s action:
US stocks ease from record levels
The S&P 500 and the Dow Jones indexes retreated from record levels on Monday, as investors geared up for the start of the corporate reporting season and a key inflation report later this week. The Dow Jones Industrial Average was down 42.80 points, or 0.13%, at 33,757.80, the S&P 500 was down 4.33 points, or 0.10%, at 4,124.47 and the Nasdaq Composite was down 62.12 points, or 0.45%, at 13,838.07. were down 47 points, or 0.34%
European stocks ease from record high
European stocks eased from all-time highs on Monday as investors held off from making big bets ahead of the earnings season, while British retailers reopened as the economy emerges from a strict winter lockdown. The pan-European STOXX 600 index fell 0.39% after closing at a record high on Friday, with banks, commodity and retail sectors among the biggest decliners.
Tech View: Nifty trend turns negative
Nifty50 formed a Long Black Day candle on the daily chart in a followup to the weakness seen on the weekly chart last week. Independent Analyst Manish Shah said a distinct pattern of lower highs and lower lows has been observed. “The slope of the moving average has turned negative and this indicates that the market is turning lower. Nifty’s volatility squeeze seen in the last two days seems to be resolving on the downside. With this, the trajectory has turned down and Nifty50 is likely to see a decline to a pre-Budget low of 13,500-13,400 levels. Any short-term rally should be used as an opportunity to sell,” he said.
Check out the candlestick formations in the latest trading sessions
F&O: VIX signalling weakness
India VIX moved up 16.25% from 19.78 to 22.99 levels. A spike in volatility from lower zones has again given the bulls a tough task to hold their key levels. On the options front, maximum Put Open Interest stood at 14,000 level followed by 14,500 while maximum Call OI stood at 15,000 level followed by 15,500. There was Call writing at 14,500 and then 15,000 levels, while minor Put writing was seen at strike prices 14,300 and 14,400. Options data suggested a wider trading range between 14,000 and 14,800 levels.
Stocks showing bullish bias
Momentum indicator Moving Average Convergence Divergence (MACD) on Monday showed bullish trade setup on the counters of Mold-Tek Packaging, KDDL, Palash Securities and TCI Developers.
Stocks signalling weakness ahead
The MACD showed bearish signs on the counters of Fortis Healthcare,
, UPL, Firstsource Solution, , , Tata Coffee, Gujarat Gas, Balkrishna Industries, V-Guard, Aarti Drugs, Berger Paints, Va Tech Wabag, Eveready Industries, Polycab India, Oberoi Realty, ADF Foods, JK Cement, Kirloskar Industries and Kennametal India.
Monday’s most active stocks
Tata Motors (Rs 3084.64 crore), Infosys (Rs 2932.50 crore), Cipla (Rs 2754.39 crore), SBI (Rs 2490.73 crore), Adani Ports SEZ (Rs 2142.60 crore), Bajaj Finance (Rs 2040.82 crore), Tata Steel (Rs 1922.11 crore), RIL (Rs 1854.91 crore), Dr. Reddys (Rs 1724.09 crore) and JSW Steel (Rs 1644.16 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: 23.09 crore), PNB (Shares traded: 18.44 crore), Tata Power (Shares traded: 12.59 crore), YES Bank (Shares traded: 12.37 crore), Tata Motors (Shares traded: 10.53 crore), SAIL (Shares traded: 9.71 crore), BHEL (Shares traded: 8.76 crore), IDFC First Bank (Shares traded: 8.61 crore), Bank of Baroda (Shares traded: 7.71 crore) and SBI (Shares traded: 7.55 crore) were among the most traded stocks in the session.
Stocks showing buying interest
Cadila Healthcare, Cipla, Infosys, Dr. Lal Path Labs, MindTree, Prabhat Dairy, Nureca, Supreme Petrochem, Mphasis, Coforge and
witnessed strong buying interest from market participants as they scaled their fresh 52-week highs on Monday signalling bullish sentiment.
Stocks seeing selling pressure
Suvidhaa Infoserve, Ortin Laboratories, Khaitan (India), Generic Engineering, AKG Exim, Asian Hotels (West), Kohinoor Foods, Mittal Lifestyle, Shirpur Gold Refinery and Spencer’s Retail witnessed strong selling pressure in Monday’s session and hit their 52-week lows, signalling bearish sentiment on these counters.
Sentiment meter favours bears
Overall, market breadth remained in favour of bears. As many as 12 stocks on the BSE 500 index settled the day in green, while 487 settled the day in red.
Podcast: Themes that can help you sail against the tide >>>
It was the worst day for domestic indices since February 26, as rising fears of lockdowns spooked Dalal Street investors. The trading community was worried that any lockdown, even if temporary, will halt the economic recovery and bring earnings downgrades for India Inc. Sensex plunged 1,707 points for the day to about 47,900 level. Nifty barely managed to close above 14,300. We spoke to Deepak Jasani of HDFC Securities to share his views on the market.