10,607.3555.65
Stock Analysis, IPO, Mutual Funds, Bonds & More

Ahead of Market: 12 things that will decide stock action on Monday

A look at what some of the key indicators are suggesting for Monday’s market action.

, ETMarkets.com|
Last Updated: May 31, 2020, 04.25 PM IST
0Comments
iStock
market
Analysts said Nifty’s short-term trend continues to be positive with the next upside levels in the 9,750-9,800 range.
NEW DELHI: Nifty futures and stock futures across the board closed at a discount to spot prices on Friday. Nifty futures closed almost 100 points below spot, which is not usual.

Another unusual aspect was that the highest Call open interest continued to steadfastly remain at strike price 9,500 even though Nifty has moved past this level and closed above it. In a logical adjustment, either there will be a sharp shift in OI level, or Nifty would see some retracement in the form of consolidation.

Analysts said Nifty’s short-term trend continues to be positive with the next upside levels in the 9,750-9,800 range. Any downward correction towards 9,400 level could be a ‘buy on dips’ opportunity next week, they said.

"Nifty is now heading towards the immediate resistance at 9730-50 levels, which is the trendline resistance and previous opening downside gap of May 4. Expect some profit booking at higher levels, which can offer buy-on-dips opportunity," said Nagaraj Shetti, Technical Research Analyst, HDFC Securities.

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

US stocks unmoved by Trump HK move
US stocks finished mostly higher on Friday after President Donald Trump announced measures against China in response to new security legislation that were less threatening to the US economy than investors had feared. Dow ended the session 17.53 points, or 0.07%, lower but the S&P500 gained 14.58 points, or 0.48%, and the Nasdaq 120.88 points, or 1.29%,

European shares fell ahead of Trump move
European stocks fell on Friday, with investors nervous ahead of UU President Donald Trump's action on China's Hong Kong move. Breaking a four-session win streak, the Stoxx Europe 600 index fell 1% to 351 after a 1.6% gain on Thursday. The German DAX fell 1.2%, the French CAC 0.8% and the FTSE fell 0.9%.

Lockdown extended in high-risk zones
India extended its coronavirus lockdown until June 30 in high-risk zones but permitted restaurants, malls and religious buildings to reopen elsewhere from June 8 despite a record high number of cases detected nationwide on Saturday. The government allowed hospitality and retail sectors and places of worship to open from June 8.

Macro data shows weakness all over
India’s economy grew at its slowest pace in at least eight years in the January-March quarter as the Covid-19 pandemic weakened already sluggish consumer demand and investments. But Asia’s third-largest economy saw GDP grow at a faster-than-expected 3.1% in March quarter, compared with 5.7% a year ago. Meanwhile, fiscal deficit for last financial year that ran through March, missed the government estimate by nearly 80 basis points to finish the year at 4.59% of gross domestic product against a target of 3.8%. India’s infrastructure output contracted 38.1% in April from a year earlier. Growth in the core sector, comprising coal, crude oil and electricity and five other industries, accounts for nearly 40% of the country’s industrial output.

Nifty tech charts look bullish
Nifty50 climbed for the third straight day on Friday and closed around its intraday high, forming a bullish candle on both daily and weekly charts. The index has been forming higher highs and lows for the past few sessions and analysts do not see the positive trend reversing unless a bout of selling takes the index below the 9,300 level in the near term. The MACD also generated a fresh ‘buy’ signal on the daily chart.

F&O data pegs Nifty range at 9,000-10,000.
Since last few sessions, the market breadth has been strong and many sectoral indices have broken out of their consolidation ranges, indicating broadbased buying interest. Momentum oscillator RSI is placed positively on the daily chart and, thus, signalling continuation of the up-move in the coming days. Going forward, Nifty will face resistance at 9,730 and then 9,889 levels, while support is inching higher to the 9,375 – 9,300 zone. Options data suggested a wider trading range between 9,000 and 10,000 levels.

Stocks showing bullish bias
Momentum indicator Moving Average Convergence Divergence (MACD) on Friday showed bullish trade setup on the counters of NCC, M&M Financial Services, Manappuram Finance, HDFC, HPCL, Dabur India, Chennai Petroleum, Fortis Healthcare, Bajaj Auto, Dr. Reddy's Labs, Torrent Power, Orient Paper, KPIT Technologies, Sun Pharma Advanced, Munjal Auto Industries, Indiabulls Real Estate, Bata India, Hercules Hoists, Engineers India, Karur Vysya Bank, Sundaram Fasteners, Igarashi Motors, NLC India, Jyothy Labs, Hexaware Technologies, KRBL, CreditAccess Grameen and Tata Coffee, among others.

Stocks signalling weakness ahead
The MACD showed bearish signs on the counters of Tata Consumer Products, Sun TV Network, Greaves Cotton, PI Industries, Welspun Enterprises, Nagreeka Exports, Autolite, Nahar Poly Films Ltd, Sakar Healthcare, Asian Hotels (East), Intrasoft Technologies, Tokyo Plast, GKW and Arihant Foundations. Bearish crossover on the MACD on these counters indicated that they have just begun their downward journey.

Friday’s most active stocks in volume terms
Vodafone Idea (Shares traded: 214.75 crore) , Ashok Leyland (Shares traded: 16.18 crore) , IDFC First Bank (Shares traded: 15.37 crore) , Tata Power (Shares traded: 14.96 crore) , BHEL (Shares traded: 10.51 crore) , Tata Motors (Shares traded: 8.08 crore) , Federal Bank (Shares traded: 7.39 crore) , Tata Consumer Products (Shares traded: 6.34 crore) , ICICI Bank (Shares traded: 6.05 crore) and SBI (Shares traded: 5.83 crore) were among the most traded stocks in the session.

Stocks seeing buying interest
J B Chemicals, Dixon Technologies (India), Cipla, Aurobindo Pharma and India Grid Trust witnessed strong buying interest from market participants as they scaled their fresh 52-week highs on Friday signalling bullish sentiment.

Stocks witnessing selling pressure
Rajesh Exports, Chalet Hotels, Sumit Woods, Vertoz Advertising and MMP Industries witnessed strong selling pressure in Friday’s session and hit their 52-week lows, signalling bearish sentiment on these counters.

Podcast: Is Nifty heading for another major tumble?
Rising Covid19 cases, US-China tensions, and even weak macroeconomic data are no longer worrying stock investors. At least, that's what the market suggested during the week gone by. Despite a pall of gloom across the world, stocks rallied and that was a global phenomenon. But is this rally sustainable? Does this make a case for new investors to join in or have they missed the bus already? What could be best options to bet on at this stage?

(What's moving Sensex and Nifty Track latest market news, stock tips and expert advice on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds.)

Also Read

Ahead of Market: 12 things that will decide stock action on Friday

Ahead of Market: 12 things that will decide stock action on Thursday

Ahead of Market: 12 things that will decide stock action on Wednesday

Ahead of Market: 12 things that will decide stock action on Tuesday

Ahead of Market: 12 things that will decide stock action on Monday

Ahead of Market: 12 things that will decide stock action on Friday

Comments
Add Your Comments
Commenting feature is disabled in your country/region.

Other useful Links


Copyright © 2020 Bennett, Coleman & Co. Ltd. All rights reserved. For reprint rights: Times Syndication Service