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

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

, ETMarkets.com|
Last Updated: Jun 04, 2020, 09.41 AM IST
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Analysts said Nifty may now see a consolidative move before starting the next leg of rally.
NEW DELHI: Nifty ended a sixth session with gains on Wednesday, but it closed below its opening mark and formed a bearish candle, showing signs of fatigue. Remember, the index has rallied more than 1,100 points in six sessions.

Analysts said Nifty may now see a consolidative move before starting the next leg of rally. They said banking stocks are expected to remain in action while pharma stocks may remain under pressure in the near term.

Deepak Jasani of HDFC Securities said technically Nifty looks tired after rising for six straight sessions and looks set for a correction. "On any up-move, the 10,175 level could offer resistance while support will come in the 9,889-9,995 zone," he said.

Gaurav Ratnaparkhi of Sharekhan by BNP Paribas said on the higher side, the index has entered the gap area of 10160-10295, which it had left during the March decline.

"This area posed as a crucial barrier, thus restricting upside further. Thus, Nifty couldn't build on the early gains. Structurally, this bounce looks susceptible to profit booking. The hourly momentum indicator is showing negative divergence, which is a bearish sign,” he said.

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

US shares gain on recovery hopes
A jump in Boeing shares lifted Wall Street on Wednesday, with investors remaining optimistic about an economic rebound from a coronavirus-led slump amid continuing social unrest in the country. At 7:46 pm (IST), the Dow Jones Industrial Average was up 251.67 points, or 0.98 per cent, at 25,994.32, the S&P 500 was up 24.07 points, or 0.78 per cent, at 3,104.89 and the Nasdaq Composite was up 39.69 points, or 0.41 per cent, at 9,648.07.

European shares rise on upbeat data
European shares joined a global rally on Wednesday, helped by gains in insurer Allianz and carmaker Renault, with signs of a pickup in business activity adding to hopes of a faster economic rebound as several countries relax coronavirus-led lockdowns. The pan-European STOXX 600 rose 1.2 per cent, hovering near three-month highs, as a survey showed China's services sector returned to growth in May, while data from the euro zone suggested the worst of the pandemic's economic impact was over.

Tech View: Signs of fatigue all over
Nifty50 on Wednesday showed signs of fatigue all over, as it came off from the day's high of 10,176 and ended up forming a small bearish candle on the daily chart for the first time in six sessions. Analysts said a profit-booking move looks due

Check out the candlestick formations in the latest trading sessions
1

F&O: Nifty may consolidate now

While Nifty made higher highs and lows on the daily scale, it closed below the opening mark and formed a bearish candle on the daily scale. The 50-pack may now see a consolidative move before starting the next leg of rally, say analysts.

Stocks showing bullish bias
Momentum indicator Moving Average Convergence Divergence (MACD) on Wednesday showed bullish trade setup on the counters of Shriram Transport Finance, RIL, Sun Pharma, Indraprastha Gas, Sterlite Technologies, Lakshmi Vilas Bank, Laurus Labs, Network 18 Media, Jammu & Kashmir Bank, La Opala RG, Ashoka Buildcon, Infibeam Avenues, Eros International and DB Realty, among others.

Stocks signalling weakness ahead

The MACD showed bearish signs on the counters of Emami, Coromandel International, NIIT Technologies, Sequent Scientific, IndiaMART InterMESH, PI Industries, Mindteck (India), Insecticides (India) and Oracle Financial Services. Bearish crossover on the MACD on these counters indicated that they have just begun their downward journey.

Most active stocks in value terms
Bajaj Finance (Rs 4593.44 crore) , HDFC Bank (Rs 2602.81 crore) , ICICI Bank (Rs 2537.52 crore) , Axis Bank (Rs 2076.85 crore) , SBI (Rs 1993.04 crore) , RIL (Rs 1807.26 crore) , HDFC (Rs 1741.32 crore) , Kotak Bank (Rs 1703.86 crore) , Bharti Airtel (Rs 1620.29 crore) and Bajaj Finserv (Rs 1303.41 crore) were among the most active stocks on Dalal Street on Wednesday 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 volume terms
Vodafone Idea (Shares traded: 96.07 crore) , SBI (Shares traded: 11.31 crore) , Tata Motors (Shares traded: 9.06 crore) , PNB (Shares traded: 8.62 crore) , South Indian Bank (Shares traded: 8.27 crore) , Bank of Baroda (Shares traded: 7.32 crore) , Tata Power (Shares traded: 7.03 crore) , ICICI Bank (Shares traded: 6.97 crore) , Adani Power (Shares traded: 6.86 crore) and Uttam Value Steel (Shares traded: 5.33 crore) were among the most traded stocks in the session.

Stocks seeing buying interest

Alok Industries, GMM Pfaudler, Dixon Technologies (India) Ltd., Aurobindo Pharma and Britannia Industries witnessed strong buying interest from market participants as they scaled their fresh 52-week highs on Wednesday signalling bullish sentiment.

Stocks witnessing selling pressure
Airan and IIFL Finance witnessed strong selling pressure in Wednesday’s session and hit their 52-week lows, signalling bearish sentiment on these counters.

Sentiment meter favours bulls
Overall, market breadth remained in favour of bulls. As many as 298 stocks on the BSE 500 index settled the day in green, while 199 settled the day in red.

Podcast: Is a Nifty correction overdue?

Nifty has ignored depressing macroeconomic data and rising coronavirus cases to rally for six sessions in a row, which has caught even the most bullish analyst by surprise. The benchmark equity indices have climbed over 10% in the last six sessions. Is this rally sustainable?

(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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