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

NEW DELHI: As Nifty ended below the 11,800 level on Monday it formed a long bearish candle on the daily chart.

Nagaraj Shetti of HDFC Securities said the short term trend of Nifty seems to have reversed from the highs, but the near term trend status of the market remains range bound around 12000-11650 levels.

"The sharp follow-through weakness is not expected from here in the short term, but there is a possibility of an upside bounce emerging from here or from slightly lower levels. The crucial lower support is placed around 11650-11600 levels," he said.

Ajit Mishra of Religare Broking said the news of rising COVID cases across Europe and the US is haunting markets across the globe.

"Besides, participants are hoping for some clarity over the US stimulus package before the US election. Amid all, domestic earnings announcements are further adding to the volatility. We feel it’s prudent to maintain positions on both sides in stocks despite the prevailing consolidation bias in Nifty," he said.

Vinod Nair of Geojit Financial Services said Indian markets are taking a correction from the recent rally which has factored a lot about an uptrend in earnings growth due to positive Q2 results.

"Indian indices are expected to remain weak in the near-term and will be driven by the trend of ongoing Q2 results and developments in the US. A big correction is unlikely with 11,500 as a strong support for Nifty50," he said.

That said here’s a look at what some of the key indicators are suggesting for Tuesday's action:
US stocks fall on rising virus cases
US stocks fell sharply on Monday as surging coronavirus cases and a stalemate in Washington over the next fiscal aid bill darkened the economic outlook in the run up to the Nov. 3 presidential election. The Dow Jones Industrial Average fell 651.31 points, or 2.30%, to 27,684.12, the S&P 500 index lost 65.08 points, or 1.90%, to 3,399.47 and the Nasdaq Composite index lost 173.94 points, or 1.53%, to 11,375.16.

Coronavirus restrictions, SAP slump hit European shares
European stocks fell on Monday as Italy and Spain imposed fresh restrictions to control a resurgence in coronavirus cases, while shares in German heavyweight SAP slumped after it cut its 2020 outlook. The pan-European STOXX 600 index declined 0.5% and the euro zone blue-chip index tumbled 1.4%, with risk appetite globally sapped by worries over slow progress on a new U.S. stimulus bill and looming presidential election.

Tech View: Nifty forms long bearish candle
After forming indecisive candles in the last couple of sessions, Nifty50 at last showed signs of weakness on Monday. The index formed a long bearish candle on the daily chart, breached its crucial resistance in the 11,800-11,780 range, showed signs of weakness on the momentum indicators and now stares at the prospect of further downside. Analysts said the odds are good that the index may test the 11,650-600 range in the coming days.

Check out the candlestick formations in the latest trading sessions

ETMarkets.com

F&O: VIX sees a spike
India VIX moved up 4.6 per cent from 21.82 to 22.83 levels. Volatility needs to cool down below 20 level for the market to stabilise and keep a check on any spike on account of the US election. Options data suggested a wider trading range between 11,500 and 12,000 levels.

Stocks showing bullish bias
Momentum indicator Moving Average Convergence Divergence (MACD) on Monday showed bullish trade setup on the counters of Tata Motors, HDFC Life Insurance, Firstsource Solution, Central Bank, V-Guard Industries, Texmo Pipes, NIIT, Mold-Tek Technologies, Birla Corporation, Prime Focus, Deepak Fertilisers, Geojit Financial, Mahindra CIE Auto, Tera Software, Sical Logistics, Gulf Oil Lubricants, Usha Martin, JTEKT India, Zydus Wellness, Adhunik Industries, KDDL, Orient Press, Zenith Exports and Naga Dhunseri Group among others.

Stocks signalling weakness ahead
The MACD showed bearish signs on the counters of IDFC First Bank, Manappuram Finance, Bandhan Bank, Bajaj Auto, Jain Irrigation, Asian Paints, The Ramco Cements, Gayatri Projects, Siemens, Pidilite Industries, Gujarat Pipavav Port, Praj Industries, Balaji Amines, Quess Corp, Hercules Hoists, Shakti Pumps, Bal Pharma, GNA Axles, Nath Bio-Genes, Vishwaraj Sugar Industries, Johnson Controls-Hit, Banaras Beads and Summit Securities among others.

Monday’s most active stocks
RIL (Rs 3535.29 crore), Coforge Ltd. (Rs 1412.83 crore), Hero MotoCorp (Rs 1233.03 crore), Tata Motors (Rs 1199.33 crore), HDFC Bank (Rs 1196.06 crore), Bajaj Finance (Rs 1161.28 crore), Kotak Bank (Rs 1115.47 crore), Maruti Suzuki (Rs 1099.38 crore), IndusInd Bank (Rs 1083.66 crore) and HDFC (Rs 1019.31 crore) were among the most active stocks on Dalal Street on Monday in value terms.

Monday’s most active stocks in volume terms:
YES Bank (shares traded: 18.75 crore), Reliance Power (shares traded: 13.68 crore), Vodafone Idea (shares traded: 9.24 crore), Tata Motors (shares traded: 8.85 crore), Suzlon Energy (shares traded: 5.18 crore), Vedanta (shares traded: 4.66 crore), SBI (shares traded: 4.54 crore), Ashok Leyland (shares traded: 4.25 crore), NTPC (shares traded: 3.47 crore) and Bank of Baroda (shares traded: 3.35 crore) were among the most traded stocks in the session.

Stocks seeing buying interest
Thyrocare Technologies, Ceat, Century Plyboards, MCX India and APL Apollo Tube witnessed strong buying interest from market participants as they scaled their fresh 52-week highs on Monday signalling bullish sentiment.

Stocks seeing selling pressure
Archidply Decor, Mittal LifeStyle, Sintercom India, Hemisphere Properties India and WABCO India witnessed strong selling pressure in Monday’s session and hit their 52-week lows, signalling bearish sentiment on these counters.

Sentiment meter favours bears
Overall, market breadth remained in favour of bears. As many as 105 stocks on the BSE 500 index settled the day in green, while 391 settled the day in red.

Podcast: What's next for the market after manic Monday? >>>

Heavy selling in Reliance Industries alone wiped out nearly 250 points from the Sensex today. Private lenders included HDFC Bank, ICICI Bank and Axis Bank further dragged the 30-share index down by around 200 points. Sensex ended the day with a loss of 540 points to close at 40,145.40 points, while Nifty settled at 11,767.75 points. We caught up with Mayuresh Joshi, Head- Equity Research, William O'Neil India, to understand his views on what lies ahead for the market.