Market Preview: 10 Factors that will Determine Friday’s Trading Activity

Amid positive global cues, Indian equities recorded a fresh lifetime high intraday on Thursday, with Sensex hitting 66,000 levels for the first time. Nonetheless, selling in blue chips led the indices to pare intraday gains with Nifty ending at 19,414 points, while Sensex settled at 65,559, adding 0.25%. Meanwhile, broader markets underperformed the headline indices.

Here’s how analysts read the market pulse:

“Today’s domestic rally was supported by the contra bet buying of the IT stocks, which was supported by stable margins, new generation business opportunities and increase in pricing power due to moderation in USD, as latest US inflation is fast approaching the Fed’s target levels. However, a mixed start to bank earnings, coupled with ongoing concerns about domestic inflation, attracted bearish sentiment towards the latter half,” said Vinod Nair, Head of Research at Geojit Financial Services.

“Nifty is likely to consolidate in the range of 19300 – 19570 and until this range is decisively breached on either side we can expect the sideways price action to continue. Overall, the trend is positive, and Nifty is undergoing time-wise correction. The crucial support zone stands at 19360 – 19320 while the resistance zone is placed at 19550 – 19570,” said Jatin Gedia, Technical Research Analyst, Sharekhan by BNP Paribas.

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

US market
Wall Street rose on Thursday after producer prices data provided further evidence of inflation cooling in the world’s largest economy, and stoked hopes that the Federal Reserve will soon end its monetary policy tightening.

US producer prices barely rose in June and the annual increase in producer inflation was the smallest in nearly three years. A separate report showed weekly jobless claims unexpectedly fell last week, indicating that the labor market remains tight. At 9:44 a.m. ET, the Dow Jones Industrial Average was up 92.93 points, or 0.27%, at 34,440.36, the S&P 500 was up 23.92 points, or 0.53%, at 4,496.08, and the Nasdaq Composite was up 131.84 points, or 0.95%, at 14,050.80.

European shares
European shares rose on Thursday, with technology stocks in the lead, as hopes that the Federal Reserve’s post-pandemic tightening cycle was close to an end due to cooling U.S. inflation overshadowed weak trade data from China.

The pan-European STOXX 600 index was up 0.4% at 8:35 GMT, extending gains to the fifth straight day.

A faster-than-expected slowdown in U.S. consumer inflation reinforced bets that the Fed could end its rate hikes soon after July, helping the benchmark log its biggest percentage gain since early June on Wednesday.
Tech View: Small negative candle

A small negative candle was formed on the daily chart with a long upper shadow. Technically, this pattern indicates lack of strength in the market to sustain the new highs. We observe range bound action in the market around 19500-19300 levels in the last one week and the sideways movement is expected to continue for the short term.

Stocks showing bullish bias
Momentum indicator Moving Average Convergence Divergence (MACD) showed bullish trade on the counters of Zomato, Tejas Network, Piramal Enterprises and Finolex Cables 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 Tata Power, L&T Financial Holdings, Jai Corp, Indiabulls Housing Finance and Gujarat Pipavav, among others. 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 3455 crore), ICICI Bank (Rs 2215 crore), RIL( Rs 1879 crore), Zomato (Rs 1575 crore) and Mazagon Dock Shipbuilders (Rs 1282 crore) were among the most active stocks on NSE 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
Zomato (Shares traded: 19.26 crore), Suzlon Energy (Shares traded: 14.91 crore), YES Bank (Shares traded: 12.55 crore), Reliance Power (Shares traded: 11.47 crore) and PNB (Shares traded: 9.83 crore) are among the most traded stocks in the session on NSE.

Stocks showing buying interest
Shares of Tejas Networks, Phoenix Mills, Zomato, Tanla Solutions and FACT, among others, witnessed strong buying interest from market participants as they scaled their fresh 52-week highs.
Stocks seeing selling pressure

Shares of UPL, Aarti Industries, Dangee Dums and Jet Airways among others stocks that hit their 52-week lows, signaling bearish sentiment on the counters.

Sentiment meter favours bears
Overall, market breadth favoured bears as 1,211 stocks ended in the green, while 2,252 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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