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

NEW DELHI: A possible contagion in the domestic mutual fund industry after Franklin Templeton Mutual Fund shut down some debt funds and a delay in the much-awaited government stimulus for industry threaten to spread pessimism among investors, as the market enters the final week of the ongoing lockdown, pending a further extension.

Weak global cues, concerns over rising Covid-19 cases, April series F&O expiry and poor economic data globally indicating an imminent recession may all go on to dampen market mood.

Domestic equity benchmarks plunged on Friday, failing to sustain the momentum of the last two sessions. Sensex tanked 535 points to 31,327, recording the first weekly drop after gaining for two consecutive weeks. Nifty settled 159 points lower at 9,154.

March quarter corporate earnings will provide further cues on market direction going into the next week.

"The market shaved off gains as winding up of a few debt schemes by a large fund house added to the selling pressure in bank and NBFC stocks. RIL and a few pharma names were the only saving grace in Friday's session,” said S Ranganathan, Head of Research at LKP Securities.

Investors should have a clear asset allocation strategy to navigate the current market volatility, he said.
That said, here’s a look at what some of the key indicators are suggesting for Monday’s market action:
US stocks gain on easing of lockdown

Stocks jumped on Wall Street in Friday’s session as some states prepared to relax coronavirus-related stay-at-home orders and tech investors pushed Apple and Microsoft shares higher. Dow rose 1.1 per cent to end the session at 23,775. The S&P500 - a widely used gauge of US retirement and college savings accounts - gained 1.4 per cent, while the Nasdaq Composite added 1.7 per cent.

Covid continues to spook European shares
European stocks ended lower Friday, snapping two days of gains, after the region’s leaders failed to agree on a long-term stimulus package and reports of a failed Covid-19 drug trial weighed on sentiment. The Stoxx Europe 600 Index fell 1.1% on the day, posting its first weekly drop in three weeks. All 19 industry groups slipped, with cyclicals including carmakers, banks and travel & leisure leading the decline. FTSE100 slipped 1.28 per cent, DAX 1.69 per cent and CAC 1.30 per cent.

Gravestone Doji on Nifty chart suggests indecisiveness
Nifty50 on Friday fell after two consecutive days of rise. During the session, the index made an attempt to wipe out intraday losses, but selling re-emerged around the 9,300 level. The index formed an indecisive Gravestone Doji on daily chart and a Hanging Man pattern on weekly chart. Analysts said the index needs to respect the 9,050-9,100 range, else selling pressure may intensify. On the upside, the 9,350-9,390 range continues to pose strong resistance for the index, they said.

F&O data signals Nifty range at 8,800-9,500
In F&O charts, maximum Call open interest in Nifty was seen at 9,500 and then 10,000 levels, while maximum Put OI was at 9,000 and then 8,000 levels. There was meaningful Call writing at 9,300 and then 9,400 levels, while Put writing was seen at 8,900 with Put unwinding at 9,000. Options data indicated an immediate trading range between 8,800 and 9,500 levels. India VIX fell marginally by 0.29% to 39.12 level and it has been falling gradually since the last four consecutive weeks.

Stocks showing bullish bias
Momentum indicator Moving Average Convergence Divergence (MACD) on Friday showed bullish trade setup on the counters of Ajanta Pharma, Capri Global Capital, Zydus Wellness, Beardsell and Karda Constructions . The MACD is known for signalling trend reversals in traded securities or indices. It is the difference between the 26-day and 12-day exponential moving averages. A nine-day exponential moving average, called the signal line, is plotted on top of the MACD to reflect ‘buy’ or ‘sell’ opportunities. 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 signalling weakness ahead
The MACD showed bearish signs on the counters of KM Sugar Mills, Poly Medicure, India Power Corp, Pearl Polymers, SKM Egg Products, Akzo Nobel India and Cera Sanitaryware. Bearish crossover on the MACD on these counters indicated that they have just begun their downward journey.

Most active stocks in value terms
RIL (Rs 8832.34 crore), Bajaj Finance (Rs 2122.69 crore), HDFC Bank (Rs 1560.20 crore), Axis Bank (Rs 1467.72 crore), ICICI Bank (Rs 1296.68 crore), Lupin (Rs 1279.87 crore), SBI (Rs 1179.83 crore), HDFC (Rs 1145.94 crore), Sun Pharma (Rs 1141.57 crore) and Kotak Bank (Rs 841.60 crore) were among the most active stocks on Dalal Street on Friday 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
Vodafone Idea (Shares traded: 32.11 crore), SBI (Shares traded: 6.51 crore), NALCO (Shares traded: 6.37 crore), RIL (Shares traded: 6.17 crore), RBL Bank Ltd. (Shares traded: 4.44 crore), Tata Motors (Shares traded: 4.00 crore), ICICI Bank (Shares traded: 3.85 crore), Equitas Holdings Ltd. (Shares traded: 3.83 crore), Axis Bank (Shares traded: 3.58 crore) and YES Bank (Shares traded: 3.40 crore) were among the most traded stocks in the session.

Podcast: Don’t tar all debt funds with the same brush?
The latest casualty of Covid-19 disruption has been six debt fund schemes of Franklin Templeton Mutual Fund. The fund house's decision to shut down the schemes citing dearth of liquidity and investment opportunity has triggered panic among investors.

Stocks showing buyers’ interest
Alembic Pharma, Lupin, Laurus Labs, Ruchi Soya Industries and Sun Pharma witnessed strong buying interest from market participants as they scaled their fresh 52-week highs on Friday signalling bullish sentiment.

Stocks witnessing selling pressure
Bajaj Finance, Chalet Hotels, Bank of Baroda, Aditya Birla Fashion and Schaeffler India witnessed strong selling pressure in Friday’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 106 stocks on the BSE 500 index settled the day in green, while 393 settled the day in red.

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