Ahead of Market: 10 things that will decide D-St action on Thursday

Indian equity benchmarks fell for the fourth session in a row on Wednesday and recorded their worst day in over three weeks after strong US data fuelled worries about higher-for-longer interest rates. Ahead of the release of the crucial Fed minutes that may provide cues on the Fed’s rate hike action going ahead, Nifty crashed 272 points and ended around 17,550.

Further, fall in the Adani Group stocks dented sentiments dragging Sensex down 927 points to settle at 59,745. Sector-wise, all indices ended in the red, with Nifty Metal and Nifty PSU Bank emerging as top losers.

Here's how analysts read the market pulse:

“NIFTY 50 index is trading in a downtrend with lower-high and lower-low formation intact on the daily and weekly charts. The momentum indicator RSI is on the verge of a breakdown and is likely to enter the weak zone. The view remains bearish as long as the index stays below the 18,000 mark and can slide towards 17,400/ 17,200 levels,” said Rupak De, Senior Technical Analyst at LKP Securities.

“Resurgence of cold war between US & Russia has brought apprehension in the market. Although it should be a short-term effect, the fear of sanctions against Russia and its degree of implication on the economy, especially on food and oil exports, is adding to the anxiety. The market is just recovering from the pandemic, and high interest & inflation are the headwinds in the background. It is presumed that this war will be fought on an economic front, limiting its effect on strong economies like the US & India. Awaiting the release of Fed and RBI minutes are the other major elements that kept investors on the side lines,” said Vinod Nair, Head of Research at Geojit Financial Services.

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

US market
Wall Street's main indexes edged up on Wednesday, a day after their worst performance of the year, as investors awaited minutes from the Federal Reserve's policy meeting for fresh clues on the trajectory of interest rates.

US stocks shed over 2% on Tuesday after a rebound in business activity in February stoked fears of interest rates staying higher for longer.

Minutes from the Fed's January 31-February 1 meeting, due at 2:00 p.m. ET, are expected to detail the breadth of debate at the central bank about the rate hike path.

At 10:02 a.m. ET, the Dow Jones Industrial Average was up 25.09 points, or 0.08%, at 33,154.68, the S&P 500 was up 1.41 points, or 0.04%, at 3,998.75, and the Nasdaq Composite was up 11.20 points, or 0.10%, at 11,503.50. Six of the major S&P 500 sectors gained, with consumer discretionary stocks adding 0.4%.

European shares
European shares opened lower on Wednesday, weighed down by a decline in mining stocks as metal prices fell, and as strong economic data sparked worries that interest rates could stay higher for longer. The pan-European STOXX 600 index fell 0.4% by 0809 GMT. Investors are also awaiting the release of the minutes of the US Federal Reserve's last meeting, due later in the day.

The European basic resources index shed 1.4%, as miners tracked a fall in copper prices, also weighed down by worries about the demand outlook from China.

Tech View: Negative candle
A reasonable negative candle was formed on the daily chart with minor lower shadow. “We observe formation of overlapping candles during present weakness and the sharp decline from the swing highs (16th Feb) is missing. This pattern indicates a possibility of an upside bounce which is expected to emerge from the lows,” said Nagaraj Shetti, Technical Research Analyst, HDFC Securities.

Stocks showing bullish bias
Momentum indicator Moving Average Convergence Divergence (MACD) showed bullish trade on the counters of Coffee Day Enterprises, ITI, Thermax, Tube Investments and Sharda Cropchem, 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 ITC, Paytm, Tata Chemicals, Pricol and Havells India 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
Adani Enterprises (Rs 1527 crore), RIL (Rs 1,219 crore), ICICI Bank (Rs 1,172 crore), HDFC Bank (Rs 840 crore) and HDFC (Rs 777 crore) were among the most active stocks on NSE in value terms. Higher activity on a counter in value terms can help identify those with highest trading turnovers in the day.

Most active stocks in volume terms
Yes Bank (Shares traded: 10.6 crore), IRB Infra (Shares traded: 10.19 crore), Vodafone Idea (Shares traded: 9.4 crore), Zomato (Shares traded: 7.58 crore) and PNB (Shares traded: 5.01 crore) were among the most traded stocks in the session on NSE.

Stocks showing buying interest
Shares of IRB Infra, NMDC Steel, Blue Star, Cyient and Triveni Turbine among others witnessed strong buying interest from market participants as they scaled their fresh 52-week highs, signaling bullish sentiment.

Stocks seeing selling pressure
Shares of Adani Transmission, Adani Gas, Adani Green Energy, BSE, Tata Tele, Godrej Properties and Laurus Labs among others hit their 52-week lows, signaling bearish sentiment on the counters.

Sentiment meter favours bears
Overall, market breadth favoured bears as 884 stocks ended in the green, while 2,592 names settled with cuts.

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