bullish momentum: Ahead of Market: 10 things that will decide stock action on Monday

Indian benchmark equity indices hit all-time highs on Friday, and logged weekly gains, led by gains in IT stocks after market leaders TCS and Infosys posted quarterly reports that alleviated concerns about weak demand.

On the day, the NSE Nifty 50 added 1.14% to close at a record 21,894 points, while the S&P BSE Sensex climbed 1.18% to 72,568. They gained about 0.8% for the week.

Meanwhile, the IT index jumped 5.14%, logging its best session since Oct. 8, 2020, to hit a 21-month high.

Here’s how analysts read the market pulse:

“Nifty exhibited significant strength, securing a notable breakout on the daily chart as it surpassed the key resistance level of 21,800. This bullish move positions the index for potential short-term targets of 22,000 and 22,200. Traders are advised to consider buying opportunities on any dips toward the support level,” said Kunal Shah, Senior Technical & Derivative Analyst at LKP Securities.

Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, said, “Nifty on the weekly chart formed a reasonable bull candle with a long lower shadow. The bearish doji pattern implication of last week has been nullified this week, as Nifty closed above the high of last week at 21834 levels. The next upside level to be watched around 22200. Immediate support is at 21750.”

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

US market:

US stocks closed barely changed on Friday, after wavering between modest gains and losses, as mixed bank earnings offset cooler-than-expected inflation news that buoyed hopes for interest-rate cuts from the Federal Reserve.

For the week, the Dow gained 0.34%, the S&P 500 rose 1.84% and the Nasdaq climbed 3.09%. The gains for the S&P were the biggest weekly percentage rise since mid-December and for the Nasdaq, the largest since early November.

European shares:

European shares ended higher on Friday as bond yields fell after soft U.S. data spurred hopes of early interest rate cuts from the Federal Reserve and other major central banks, while Airbus shares shone after it reported record annual jet orders.

The pan-European STOXX 600 index ended 0.8% higher, snapping a three-day losing streak and logging its best single-day performance so far this year, though ending flat on the week.

Tech View:

Nifty on Friday ended 247 points higher to decisively break out of the 21,500-21,850 range on the upside.

As long as the index is trading above 21750, the breakout texture is likely to continue. Above the same, the market could move up till 22100-22200. On the flip side, below 21750 traders may prefer to exit out from the trading long positions. Below which, the index could retest the level of 21650-21575, said Amol Athawale of Kotak Securities.

Stocks showing bullish bias:

Momentum indicator Moving Average Convergence Divergence (MACD) showed bullish trade on the counters of Firstsource Solutions, Oracle Financial Services Software, Oracle Financial Services Software, IRFC, Coforge, Union Bank of India, and Birlasoft 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 GSPL, Pfizer, Grindwell Norton, Route Mobile, Tejas Networks, and Godrej Consumer Products 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

Infosys (Rs 4,274 crore), TCS (Rs 2,639 crore), RIL (Rs 2,048 crore), HDFC Bank (Rs 1,626 crore), ICICI Bank (Rs 1,229 crore), SBI (Rs 1,048 crore), and HCL Tech (Rs 895 crore) among others 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

ONGC (Shares traded: 3.9 crore), Tata Steel (Shares traded: 3.2 crore), Infosys (Shares traded: 2.6 crore), Wipro (Shares traded: 1.8 crore), SBI (Shares traded: 1.6 crore), NTPC (Shares traded: 1.2 crore), and ICICI Bank (Shares traded: 1.2 crore) among others were among the most traded stocks in the session on NSE.

Stocks showing buying interest

Shares of ONGC, HCL Tech, Tata Consumer Products, Bharti Airtel, IndusInd Bank, Hero MotoCorp, and Tata Motors among others witnessed strong buying interest from market participants as they scaled their fresh 52-week highs, signaling bullish sentiment.

Stocks seeing selling pressure

No major stock hit its 52-week low on Friday.

Sentiment meter favours bulls

Overall, market breadth favoured bulls as 2,066 stocks ended in the green, while 1,787 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)