Foreseeing the Market: 10 Factors Indicating Wednesday’s D-Street Movement

Indian equities ended on a somewhat flat note amid mixed global cues in a range-bound trade. The Nifty finished below 19,750, slipping a marginal 20 points. Sectorally, IT, metal, pharma, and private bank indices saw gains, while all other sectors experienced cuts. Given the current market dynamics, analysts recommend adopting a stock-specific approach in the near term.

Here’s how analysts interpret the market pulse:

“Domestic indices traded with a negative bias below the flattish trend, influenced by global peers. Despite this, mid- and small-cap stocks continued to outperform the benchmark index. IT stocks rallied amid hopes of a soft landing for the US economy. Although India’s manufacturing activity remains robust, it marginally moderated for the second consecutive month in July. The market direction in the upcoming days will hinge on key data points, including auto sales figures, US PMI, and US job data,” said Vinod Nair, Head of Research at Geojit Financial Services.

“Nifty remained above the critical near-term moving average (21EMA), reinforcing a positive outlook. A hidden positive divergence on the daily chart suggests a potential bullish reversal in price momentum. Short-term prospects indicate a sideways to positive trend if the index stays above 18550. A decisive move above 19800 could propel the index towards the 20000 mark,” Rupak De from LKP Securities commented.

That said, let’s look at what some key indicators are suggesting for Wednesday’s action:

US Market
The S&P 500 and Nasdaq fell on Tuesday as investors assessed mixed earnings from pharma heavyweights and digested data that showed manufacturing activity slowed more than expected in July.

Pfizer gained 1.3% after the drugmaker said it would launch a program to cut costs if demand for its COVID-19 products remains muted this fall.

Merck shares were flat even as it raised its full-year profit forecast after posting a smaller-than-expected second-quarter loss.

At 10:17 a.m. ET, the Dow Jones Industrial Average was up 35.72 points, or 0.10%, at 35,595.25, the S&P 500 was down 17.37 points, or 0.38%, at 4,571.59, and the Nasdaq Composite was down 114.54 points, or 0.80%, at 14,231.49.

European Shares
European stocks slipped on Tuesday, with the German DAX pulling back from record highs as shrinking factory activity in the euro zone and China underscored growing risks to the global economy from rising interest rates.

The pan-European STOXX 600 index was down 0.5%, with carmakers, real estate and miners leading sectoral declines.

Losses accelerated across euro zone markets after a survey showed manufacturing activity in the bloc contracted in July at the fastest pace since May 2020 as demand slumped despite factories cutting their prices sharply.

Tech View: Small Negative Candle
A small negative candle was formed with a minor lower shadow. Technically, this pattern signifies a lackluster movement in the market at the hurdle of the down-sloping trend line around 19800 levels.

Stocks Exhibiting Bullish Bias
The Momentum indicator Moving Average Convergence Divergence (MACD) signaled bullish trade on the counters of IDBI Bank, Urja Global, Coal India, Lemon Tree Hotels, and HFCL, among others. The MACD is known for signaling 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 Signaling Weakness Ahead
The MACD showed bearish signs on the counters of GMDC, Piramal Enterprises, Tanla Platforms, EPL, and Mazagon Dock Shipbuilders, among others. A 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 2937 crore), ICICI Bank (Rs 1543 crore), IRFC (Rs 1547 crore), NTPC (Rs 1423 crore), and Maruti Suzuki (Rs 1359 crore) were among the most active stocks on the NSE in value terms. Increased 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
IRFC (Shares traded: 38.17 crore), Reliance Power (Shares traded: 19.75 crore), Suzlon Energy (Shares traded: 16.77 crore), IDBI Bank (Shares traded: 7.78 crore), and Ujjivan SFB (Shares traded: 7.16 crore) were among the most traded stocks in the session on the NSE.

Stocks Showing Buying Interest
Shares of KIOCL, IDBI Bank, Railtel, and IRFC, among others, witnessed strong buying interest from market participants as they scaled their fresh 52-week highs, signaling bullish sentiment.

Stocks Experiencing Selling Pressure
Shares of UPL, MOS Utility, Viji Finance, SREI Infra, and Jalan Transolutions, among others, hit their 52-week lows, signaling bearish sentiment on these counters.

Sentiment Meter Favors Bulls
Overall, the market breadth favored bulls as 2,006 stocks ended in the green, while 1,567 names settled in the red.

(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)


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