Previewing the Market: 10 Key Factors That Will Shape Wednesday’s Trading

Indian equities fell on Tuesday, breaking their two-day winning streak, as investors turned cautious ahead of the key events — RBI’s monetary policy and the US inflation data — due to be announced later this week. Continuous foreign fund outflows and weak trend in Asian and European markets also played spoilsport for the domestic markets.

The 30-share BSE Sensex fell 106.98 points or 0.16% to settle at 65,846.50. The Nifty dipped a modest 26 points to 19,571. Sectorally, the PSU Bank index led the rally with gains surpassing 3%, while Nifty Metal declined the most, dropping over 1%.

Here are analysts’ perspectives on the market dynamics:

“Globally, investors remain cautious, even with declining bond yields, as they anticipate the release of key economic data. The significant reduction in Chinese exports has further raised global market concerns. While FIIs continue to sell in the domestic market, active purchases by DIIs are buffering against potential losses. In terms of sectors, PSU banks and pharma stocks edged higher, and mid- and small-cap stocks consistently outpaced the benchmark, showcasing their robustness,” stated Vinod Nair, Head of Research at Geojit Financial Services.

Amit Trivedi, CMT, Technical Analyst – Institutional Equities, YES SECURITIES, remarked, “The Nifty displayed uncertainty, erasing initial gains and struggling to maintain at higher levels. However, it managed to uphold its previous session’s low. The bearish candle and the downward gap formed on 2nd Aug suggest resistance around 19,700, with last week’s low (around 19,300) expected to serve as a support zone.”

Against this backdrop, here’s an overview of key indicators for Wednesday’s market:

US market
Wall Street dropped on Tuesday as financial stocks fell after Moody’s overnight cut credit ratings on several small- to mid-sized U.S. banks and said it could downgrade some of the country’s biggest lenders.The agency cut the ratings on 10 lenders by one notch and placed six banking giants, including Bank of New York Mellon , US Bancorp, State Street and Truist Financial, on review for potential downgrades.

Moody’s also warned that the sector’s credit strength would likely be tested by funding risks and weaker profitability.

At 9:42 a.m. ET, the Dow Jones Industrial Average was down 279.54 points, or 0.79%, at 35,193.59, the S&P 500 was down 32.51 points, or 0.72%, at 4,485.93, and the Nasdaq Composite was down 117.38 points, or 0.84%, at 13,877.02.

European shares
European shares dropped on Tuesday as Italian banks came under pressure after the cabinet approved a 40% windfall tax on lenders, while sticky inflation print from Germany and weak China trade data further soured investor sentiment.

Italian banks such as Intesa Sanpaolo, Banco BPM and UniCredit fell between 6.5% and 8.3% after Deputy Prime Minister Matteo Salvini said a 40% levy on banks’ extra profits will feed items such as a reduction of the tax wedge, tax cuts and financial support to holders of mortgages on first homes.

The pan-European STOXX 600 index fell 0.6%, while Italy’s banking-heavy FTSE MIB dropped 2.1% to hit its lowest level in four weeks.

Euro zone banks tumbled 3.3%, also hurt by news that ratings agency Moody’s cut credit ratings of several small- to mid-sized U.S. banks and said it may downgrade some of the biggest lenders in the United States.

Tech View: Small negative candle
A small negative candle was formed on the daily chart, nearly overshadowing the previous small positive candle from Monday. Technically, this suggests a range-bound market with a slight negative tilt.

Stocks showing bullish bias
The Momentum indicator Moving Average Convergence Divergence (MACD) indicated bullish trading for Bank of Maharashtra, Biocon, Wipro, Tech Mahindra, and Suven Life Sciences, among others.

Recognized for identifying trend shifts, the MACD provides bullish signals when it crosses above the signal line, suggesting potential upward movement of the security’s price.

Stocks signaling weakness ahead
Bearish tendencies were evident from the MACD for SAIL, IDFC, GIC Housing, JM Financial, and Indian Hotels. A bearish crossover on the MACD for these stocks indicates they might be entering a downward trajectory.

Most active stocks in value terms
IRFC (Rs 3612 crore), ICICI Bank (Rs 2332 crore), Adani Enterprises (Rs 1530 crore), and IRFC (Rs 1530 crore) stood out as the most active stocks on the NSE in terms of value. High activity on a counter can highlight those with the day’s top trading turnovers.

Most active stocks in volume terms:
Among the most traded stocks in the session on the NSE were IRFC (Shares traded: 30.33 crore), Vodafone Idea (Shares traded: 21.42 crore), Zomato (Shares traded: 16.02 crore), Reliance Power (Shares traded: 12.32 crore), and Bank of Maharashtra (Shares traded: 11.97 crore).

Stocks showing buying interest
Indian Bank, Caplin Point, Zen Tech, Bank of Maharashtra, and Inox Wind shares attracted strong buying interest, hitting their fresh 52-week highs and reflecting bullish market sentiment.

Stocks seeing selling pressure
Vinny Overseas, Vakrangee, Viji Finance, and Aakash Exploration were among the stocks that touched their 52-week lows, indicating bearish sentiment for these counters.

Sentiment meter favours bulls
Overall, the market’s mood tilted towards the bulls, with 1,813 stocks finishing in the green and 1,802 ending in the red.

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


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