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NEW DELHI: Nifty50 on Thursday failed to cross the 16,700 level and formed an indecisive Doji candle on the daily chart. Analysts said back-to-back indecisive candles suggest the index may witness short-term weakness if it falls below the 16,600 level.

Here’s how analysts read the market pulse:

Gaurav Ratnaparkhi of Sharekhan expects Nifty50 to see a minor degree dip over the next couple of sessions, as short-term momentum indicators are pointing towards a potential dip. “The index looks set to test the levels of 16,500-16,400 on the downside,” he said.

Mazhar Mohammad of Chartviewindia.in said Thursday’s indecisive price action suggests the momentum is tilting in favour of the bears. “For resumption of strength, Nifty50 needs a strong close above 16,700 level,” he said.

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

Wall Street falls on taper worries

Wall Street’s main indexes fell to session lows on Thursday on fears of a faster tapering of the U.S. Federal Reserve’s bond purchase program, with traders also pointing to a blast in Kabul for a spike in volatility. At 10:56 a.m. ET, the Dow Jones Industrial Average was down 95.65 points, or 0.27 per cent, at 35,309.85, the S&P 500 was down 20.34 points, or 0.45 per cent, at 4,475.85, and the Nasdaq Composite was down 68.33 points, or 0.45 per cent, at 14,973.53.

European stocks end lower on virus jitters

European shares ended lower on Thursday after data showed faltering German consumer morale amid rising COVID-19 cases, while investors fretted over U.S. monetary policy ahead of the Jackson Hole symposium. The pan-European STOXX 600 index fell 0.3 per cent, with mining and travel & leisure stocks leading losses.

Tech View: Back-to-back indecisive candles suggest weakness

Nifty50 negated the higher high-low formations that it had made in the previous three sessions. Analysts believe back-to-back indecisive candles do not bode well for the index and suggest any fall below the 16,600 level may trigger short-term weakness.

F&O: VIX needs to hold the 12 level for further upside

India VIX marginally moved up by 0.28 per cent from 13.49 to 13.53 levels. A cooldown in volatility from recent swing highs has again given a ‘buy on decline’ flavour to the market and now VIX needs to hold below the 12-mark to get more buying interest in the broader market. Options data suggested a broader trading range between 16,000 and 17,000 levels.

Stocks showing bullish bias

Momentum indicator Moving Average Convergence Divergence (MACD) showed bullish trade setup on the counters of South Indian Bank, M&M Financial Services, ONGC, Swan Energy, Shipping Corporation, Sterling and Wilson, LIC Housing Finance, Reliance Capital, MMTC, Dwarikesh Sugar, Trent, Zen Technologies, Cadila Healthcare, KNR Constructions, Allied Digital Services, Marine Electricals, PC Jeweller, Allcargo Logistics, Aptech, Greenply Industries, Igarashi Motors, Apollo Pipes, Venky’s (India), Esab India, EID Parry, Next Mediaworks, Mangalore Chem, Mazda, Goldstone Tech, GTL, Steel Strips Wheels, Supreme Industries, Sasken Technologies, PG Electroplast, TCI Express, Mold-Tek Packaging, Royal Orchid Hotels, ADF Foods, Somi Conveyor Belting and AKG Exim.

The MACD is known for signalling 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 signalling weakness ahead

The MACD showed bearish signs on the counters of Infosys, Au Small Finance Bank, Titan Company, Gujarat State Petronet, Bata India, Sonata Software, Seamec, Technocraft Industries, Themis Medicare, AYM Syntex, Apollo Sindoori Hotels and Tasty Bite. A bearish crossover on the MACD on these counters indicated that they have just begun their downward journey.

Most active stocks in value terms

RIL (Rs 1913.38 crore), Bharti Airtel (Rs 1536.82 crore), Tata Steel (Rs 1261.37 crore), Adani Ports SEZ (Rs 1084.63 crore), Bajaj Finserv (Rs 965.62 crore), Infosys (Rs 919.57 crore), Linde India (Rs 875.99 crore), HDFC Bank (Rs 866.91 crore), Bajaj Finance (Rs 853.74 crore) and Maruti Suzuki (Rs 794.72 crore) were among the most active stocks on Dalal Street in value terms. Higher 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

Vodafone Idea (Shares traded: 28.30 crore), YES Bank (Shares traded: 9.19 crore), SAIL (Shares traded: 5.84 crore), NMDC (Shares traded: 4.38 crore), GTL Infra (Shares traded: 3.69 crore), PNB (Shares traded: 3.55 crore), NALCO (Shares traded: 3.42 crore), Canara Bank (Shares traded: 3.02 crore), South Indian Bank (Shares traded: 2.72 crore) and JP Power (Shares traded: 2.59 crore) were among the most traded stocks in the session.

Stocks showing buying interest

ABB Power, Balaji Amines, Kajaria Ceramic, Affle (India) and JSW Energy witnessed strong buying interest from market participants as they scaled their fresh 52-week highs, signalling bullish sentiment.

Stocks seeing selling pressure

CarTrade Tech, AmaraRaja Batteries and Hero MotoCorp witnessed strong selling pressure and hit their 52-week lows, signalling bearish sentiment on these counters.

Sentiment meter favours bears

Overall, the market breadth remained in favour of the bears. As many as 224 stocks on the BSE500 index settled the day in the green, while 273 settled the day in the red.

Podcast: What will move the market going ahead?
BSE Sensex gyrated in the range of 250 points, but settled just below 55,950, adding only 5 points. Nifty50 ended almost unchanged at 16,637, merely 2 points higher. Fear gauge India VIX increased marginally. What factors may influence the market sentiment going ahead? Which sectors look attractive to you in the current scenario?

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