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

A look at what some of the key indicators are suggesting for Friday’s market action.

ETMarkets.com|
Last Updated: May 29, 2020, 07.07 AM IST
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Analysts said a part of the rally had to do with short covering in bank stocks.
NEW DELHI: Nifty continued its upmove for the second consecutive session on Thursday, forming a long bullish candle and closing above the immediate gap resistance at 9,350.

Analysts said a part of the rally had to do with short covering in bank stocks. A combination of factors including optimism in global markets and fresh financial packages from developed economic have also helped the Indian market close on a strong note. "There has been a very swift revival across most of the global markets, and somehow India lagged behind peers. Hence, there is a bit of catchup,” said Hemang Jani, equity strategist and senior vice-president at Motilal Oswal Financial Services.

Shrikant Chouhan of Kotak Securities said on an immediate basis, the 9,550 and 9,650 levels would be a major hurdle for Nifty in the short term, the market is approaching the 'overbought' status. "The strategy should be to buy on dips instead of chasing the bounce at higher levels. Nifty has support at 9,400 and 9,300 levels,” he said.

Nagaraj Shetti of HDFC Securities said the formation of a Hammer-type candle pattern and previous overlapping negative candles on weekly chart have formed a strong base for Nifty, which helped it record a sharp bounce so far this week. Last week's low of 8,806 could now be considered a near-term bottom reversal point.

"The short-term trend for Nifty positive. Next overhead resistance is placed around 9,580-9,600 levels, which could be reached in next 1-2 sessions. Near-term upside targets to be watched around 9,750," he said.

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

US shares steady near 3-month high
US stocks were largely flat on Thursday, with the S&P 500 holding at near three-month highs as investors paused after a three-day rally, weighing hopes of a swift economic recovery against underlying tensions between United States and China. At 7:20 pm (IST), the Dow Jones Industrial Average was up 11.87 points, or 0.05 per cent, at 25,560.14, the S&P 500 was up 1.70 points, or 0.06 per cent, at 3,037.83, and the Nasdaq Composite was up 2.77 points, or 0.03 per cent, at 9,415.13.

European shares extend gains

European shares rose for the fourth straight session on Thursday, as optimism over businesses reopening and a massive stimulus plan for the European Union outweighed concerns over rising US-China tensions. The pan-European STOXX 600 rose 0.9 per cent to hit a fresh 11-week high, led by a 2 per cent jump in travel & leisure stocks.

Nifty above 20- & 50-day SMAs, adds to optimism
Nifty50 hit an immediate resistance level at 9,500 on Thursday, before closing a tad below it. The index closed around the day's high point and formed a long bullish candle on the daily chart. Analysts said momentum indicator Stochastic is now in bullish mode, which supports the upside momentum. The index is sustaining above its 20-day and 50-day SMAs, adding to the optimism, said Rajesh Palviya of Axis Securities.

Check out the candlestick formations in the latest trading sessions
1

Nifty trading range at 9,000-10,000
Momentum oscillator RSI is placed positively on daily chart and thus, we maysee continuation in up-move in the coming days too. Going forward, theresistance for Nifty is placed at 9,730 and 9,900 levels, while support isinching higher to 9,300 and 9,150 levels. Options data suggested a wider trading range between 9,000 and 10,000 levels.

Stocks showing bullish bias

Momentum indicator Moving Average Convergence Divergence (MACD) on Thursday showed bullish trade setup on the counters of ICICI Bank, HDFC Bank, L&T Finance Holdings, GMR Infrastructure, Havells India, Hindustan Unilever, Meghmani Organics, Max Financial Services, Rain Industries, Bombay Dyeing, Balmer Lawrie, NRB Bearings Lim, Banco Products, Shree Renuka Sugars, Subros, ISMT, Bombay Burmah, PTC India and CCL Products India, among others.

Stocks signalling weakness ahead
The MACD showed bearish signs on the counters of Bharti Airtel, Jubilant Life Sciences, Indostar Capital Finance, NDTV, Advanced Enzyme Tech and Suven Pharma. Bearish crossover on the MACD on these counters indicated that they have just begun their downward journey.

Most active stocks in value terms
HDFC Bank (Rs 3541.10 crore) , Axis Bank (Rs 2891.09 crore) , Reliance Industries (Rs 2716.88 crore) , ICICI Bank (Rs 2154.09 crore) , IndusInd Bank (Rs 1836.16 crore) , Bajaj Finance (Rs 1769.39 crore) , HDFC (Rs 1662.89 crore) , Kotak Bank (Rs 1323.34 crore) , Eicher Motors (Rs 1307.24 crore) and ZEEL (Rs 1266.19 crore) were among the most active stocks on Dalal Street on Thursday in value terms. Higher activity on a counter in value terms can help identify the counters with highest trading turnovers in the day.

Most active stocks in terms of volume

Vodafone Idea (Shares traded: 49.01 crore) , BHEL (Shares traded: 9.89 crore) , Tata Motors (Shares traded: 9.62 crore) , State Bank of India (Shares traded: 7.69 crore) , Motherson Sumi (Shares traded: 7.49 crore) , Axis Bank (Shares traded: 7.27 crore) , ZEEL (Shares traded: 7.10 crore) , ICICI Bank (Shares traded: 6.61 crore) , Federal Bank (Shares traded: 6.51 crore) and Bank of Baroda (Shares traded: 5.11 crore) were among the most traded stocks in the session.

Stocks seeing buying interest
Alkyl Amines, Adani Green Energy, India Grid Trust and Bayer Cropsciences witnessed strong buying interest from market participants as they scaled their fresh 52-week highs on Thursday signalling bullish sentiment.

Stocks witnessing selling pressure
Arman Financial Services, B.C. Power Controls, Krishana Phoschem, Mask Investments and Sterling Tools witnessed strong selling pressure in Thursday’s session and hit their 52-week lows, signalling bearish sentiment on these counters.

Sentiment meter favours the bulls
Overall, market breadth remained in favour of bulls. As many as 381 stocks on the BSE 500 index settled the day in green, while 113 settled the day in red.

Podcast: Are the bulls here to stay for some time?
Analysts said the market rally is being driven by short covering as investorstarted to bet on a continued resumption of economic activities, in spite of thespike in Covid infections. Meanwhile, a flareup in tensions between China andthe US has already caused jitters in some markets. Under the circumstances, canthe rally on Dalal Street sustain?

(What's moving Sensex and Nifty Track latest market news, stock tips and expert advice on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds.)

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