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The Indian benchmark equity indices closed flat on Tuesday, marking a pause after a period of gains. The Nifty50, India's benchmark index, rose by a mere 0.01% to close at 25,940.4, while the S&P BSE Sensex dipped by a slight 0.02% to settle at 84,914.04. Both indices had reached record highs at the beginning of the session but were unable to sustain the momentum.
The initial gains experienced in the morning were driven by a surge in metal stocks, fueled by China's recent announcement of comprehensive stimulus measures aimed at revitalizing its economy. However, the gains were subsequently offset by profit-booking activities in the banking and consumer sectors.
Analysts attributed the flat performance to a need for consolidation after the recent rally. Rupak De of LKP Securities noted that the Nifty traded within a narrow range, taking a breather after three consecutive days of gains. Despite the short-term sentiment remaining positive, with the index staying above the crucial 21-day EMA (Exponential Moving Average) and supported by a bullish crossover in the daily RSI (Relative Strength Index), De emphasized that a decisive break above the 26,000 level is needed for the rally to continue.
Hrishikesh Yedve of Asit C Mehta Investment Intermediates added that technically, the Nifty is oscillating within a rising channel and trading near the upper trend line resistance, which lies around the 25,900-26,000 levels. This resistance poses a strong hurdle in the short term. Yedve explained that if the Nifty sustains above the 26,000 level, it could test the 26,200 levels. However, on the downside, 25,600 will act as a strong support for the index.
Meanwhile, the benchmark S&P 500 and Nasdaq indices in the US market experienced declines on Tuesday. Investors were processing a disappointing consumer confidence report and considering the upcoming policy decisions from the Federal Reserve. However, mining stocks gained traction after China announced its stimulus package. A report from the Conference Board revealed that the consumer confidence index stood at 98.7 in September, significantly lower than the 104 forecast by economists. Rate-sensitive growth stocks like Amazon, Meta, and Microsoft each dropped over 1% following the news, while yields on short-term Treasury bonds remained stable.
The article further delves into the technical analysis of the Indian market, highlighting key indicators that suggest potential market movements on Wednesday. The formation of a small-bodied candle on the daily chart hints at indecision. Osho Krishnan of Angel One pointed out that the 26,000 mark serves as a formidable barrier to the ongoing momentum, and a decisive breakthrough could trigger the next leg of the rally towards 26,200, marking a sustained uptrend. On the lower end, 25,900-25,800 is expected to cushion any shortcomings, while strong support lies around 25,750-25,700. The article also provides insights from the open interest data, with the highest OI on the call side observed at 26,000 and 26,200 strike prices, and on the put side, the highest OI was at 25,900 strike price followed by 25,800.
The article then highlights the MACD (Moving Average Convergence Divergence) indicator, which signals trend reversals. Stocks showing bullish signals on the MACD include NDR Auto Components, AstraZeneca Pharma, Epigral, Bannari Amman Sugars, and Nalwa Sons Investments. On the other hand, Bajaj Steel Industries, Galaxy Surfactants, Blue Dart Express, Bajaj Finserv, and Stove Kraft exhibited bearish signs on the MACD. The article also lists the most active stocks in value and volume terms, providing insights into the counters with the highest trading turnovers in the day. Finally, the article mentions stocks that saw strong buying interest, indicating bullish sentiment, and concludes with the overall market breadth favoring bears as 2,112 stocks ended in the red, while 1,878 names settled in the green.
Source: Ahead of Market: 10 things that will decide stock action on Wednesday