Rohit Singre, Senior Technical Analyst at LKP Securities said, "The index has formed a good base near 14,500-14,430 zone and any break below said levels can emerge in more profit booking. So longs can use said levels as their trail stop loss level. Strong hurdle zone is formed near 14,650-14,700 zone where one can start booking profits."
"Following positive global cues and ease in inflation for the month of December, the market opened with good gains. However, profit booking was triggered due to 1.9% contraction in factory output, premium valuations and concern over upcoming Union Budget, knocking down all the gains," 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 Thursday's action:
US stocks flat as stimulus rally cools
Wall Street's main indexes slipped on Wednesday as investors digested a recent run to record highs on hopes of new fiscal package and vaccine rollouts for the coronavirus-ravaged economy, while Intel shares jumped on executive change. The Dow Jones Industrial Average fell 41.68 points, or 0.13%, to 31,027.01, the S&P 500 lost 4.88 points, or 0.13%, to 3,796.31 and the Nasdaq Composite gained 0.57 points, or 0.01%, to 13,073.19.
European shares inch higher
European stocks inched up on Wednesday as merger talks powered gains in French grocer Carrefour and Spain's Telefonica, offsetting weakness in banking stocks on worries about extended lockdowns across the continent. The broader pan-European STOXX 600 index rose just 0.25% as investors took a pause after last week's strong rally.
Nifty50 on Wednesday tested the 14,450 level in a sharp intraday selloff, only to recover fully by close. The index formed a higher high for yet another session, but formed a small bearish candle with a long lower wick on the daily chart, which resembled a Hanging Man pattern. Analysts said the index could be in for some consolidation, and believe Nifty testing of the 14,400-14,367 range could put an end to the ongoing strong momentum.
Check out the candlestick formations in the latest trading sessions
F&O: Rising VIX is a worry
India VIX rose 1.94% from 22.84 to 23.29 level. Volatility needs to cool down below 20 level for Nifty to form the higher market base. There was Call unwinding at all immediate strike prices, with minor Call writing was seen at 14,600 and Put writing at 14,100 and 14,000 levels. Options data suggested a wider trading range between 14,000 and 15,000 levels, while the immediate trading range stood between 14,300 and 14,800 levels.
Stocks showing bullish bias
Momentum indicator Moving Average Convergence Divergence (MACD) on Wednesday showed bullish trade setup on the counters of Canara Bank, Tata Chemicals, IDBI Bank, Adani Ports & SEZ, IndusInd Bank, ITI, Parag Milk Foods, KNR Constructions, Cerebra Integrated Technologies, Britannia Industries, Westlife Development, EID Parry, Prabhat Dairy, Premier Polyfilm, GeeCee Ventures, Honda India Power, Sintercom India, Jindal Poly Films, Future Enterprises, Majesco and Bombay Super Hybrid.
Stocks signalling weakness ahead
The MACD showed bearish signs on the counters of Steel Authority of India, GMR Infrastructure, Jaiprakash Associates, Motherson Sumi Systems, Sun Pharma, India Cements, Graphite India, Jai Corp, Jindal Saw, PTC India Financial, Strides Pharma Science, Nippon Life AMC, Indian Energy Exchange, Welspun India, Prakash Industries, JSW Ispat Special, Phillips Carbon, ICICI Lombard General, Pidilite Industries, Aarti Industries, Varun Beverages, Coforge, Rolta India, Bharat Dynamics, Himatsingka Seide, JMC Projects, Heidelberg Cement, Century Plyboards, Puravankara, Endurance Technologies, Page Industries and Zydus Wellness.
Wednesday's most active stocks
Bharti Airtel (Rs 4902.94 crore), Tata Motors (Rs 4008.39 crore), RIL (Rs 2393.29 crore), SBI (Rs 2350.39 crore), Infosys (Rs 1991.62 crore), Bajaj Finance (Rs 1615.32 crore), M&M (Rs 1608.12 crore), HDFC (Rs 1505.54 crore), DLF (Rs 1489.60 crore) and Tata Steel (Rs 1365.03 crore) were among the most active stocks on Dalal Street on Wednesday in value terms.
Wednesday's most active stocks in volume terms
Vodafone Idea (Shares traded: 67.27 crore), YES Bank (Shares traded: 28.01 crore), PNB (Shares traded: 22.74 crore), Tata Motors (Shares traded: 16.46 crore), BHEL (Shares traded: 15.46 crore), Bank of Baroda (Shares traded: 12.76 crore), Bharti Airtel (Shares traded: 8.37 crore), SBI (Shares traded: 7.80 crore), GTL Infra (Shares traded: 7.31 crore) and Canara Bank (Shares traded: 6.49 crore) were among the most traded stocks in the session.
Stocks showing buying interest
Bajaj Electricals, Tata Elxsi, Hudco, KNR Constructions and Aegis Logistics witnessed strong buying interest from market participants as they scaled their fresh 52-week highs on Wednesday signalling bullish sentiment.
Stocks seeing selling pressure
Mrs. Bectors Food Specialities, Jump Networks, Valiant Organics and Vishal Fabrics witnessed strong selling pressure in Wednesday’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 171 stocks on the BSE 500 index settled the day in green, while 322 settled the day in red.
Podcast: Why were indices so volatile on Wednesday? >>>
It was quite a volatile day for the market, where the Sensex gyrated 721 points, only to close with marginal losses. Once again, an attempt by the bears to take control over the market failed, as the bulls displayed their strength noticeably. At close, Sensex was down 25 points and was still 500 points away from the 50,000 mark. Nifty made sure it ends above 14,650. We caught up with Deepak Jasani, Head of Retail Research at HDFC Securities, to know his views on the market.
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