Pertinently, while the market mood remains largely bullish, persistent selling by the FIIs and expensive valuation may put a check on further upside.
Here’s how analysts read the market pulse:
“The market traded range-bound after touching a new high as higher-than-expected US inflation and anticipation of hawkish ECB policy meetings later today impacted investor sentiment. Concern over valuation and inflation trajectory due to increasing oil prices may navigate the market into a consolidation phase in the near-term,” Vinod Nair, Head of Research at Geojit Financial Services, said.
“After rallying ~5% off the recent low, Nifty took a pause; it erased early gains, however managed to defend levels of 20k. For the coming weekly expiry, Nifty’s 20200 strike call and 2000 strike put holds maximum option interest base. Shifting base higher, Nifty is likely to consolidate above 20000; while minor profit-taking near 20200 is expected. Stocks specific rally within Sugar and telecom space is possible. FIIs’ remain net buyers on index futures, however they’re neutral on stocks futures,” Amit Trivedi, CMT, Technical Analyst – Institutional Equities, YES Securities, said.
That said, here’s a look at what some key indicators are suggesting for Friday’s action:
US market
Wall Street’s main indexes rose on Thursday as hotter-than-expected economic data did not dent hopes of a pause in rate hikes in September, while investors awaited Arm Holdings’ stock market debut.Shares of Arm Holdings will make their widely anticipated debut on the Nasdaq after the chip designer on Wednesday notched a $54.5 billion valuation in its IPO, priced at $51 per American Depositary Share.
At 9:38 a.m. ET, the Dow Jones Industrial Average was up 155.88 points, or 0.45%, at 34,731.41, the S&P 500 was up 23.03 points, or 0.52%, at 4,490.47, and the Nasdaq Composite was up 68.11 points, or 0.49%, at 13,881.69.
HP fell 3.7% after Warren Buffett’s Berkshire Hathaway sold about 5.5 million shares of the company.
European shares
European shares rose on Thursday after the European Central Bank raised interest rates for a tenth straight time, lifting borrowing costs to a record high while also signalling an end to their monetary policy tightening cycle.
The central bank raised rates by 25 basis points, taking the rate the ECB pays on bank deposits to 4%, the highest level since the euro was launched in 1999. The pan-European STOXX 600 climbed 0.6% by 1235 GMT, supported by banks and commodity-linked stocks. Rate-sensitive banking stocks gained 1.2%.
Tech View: Small negative candle
A small negative candle was formed on the daily chart with minor upper and lower shadow. Technically, this market action hints at a formation of a spinning top type candle pattern at the new highs. However, having placed this candle pattern within a narrow range of 20150-19950 levels, the chances of further consolidation movement is likely in the short term.
Stocks showing bullish bias
Momentum indicator Moving Average Convergence Divergence (MACD) showed bullish trade on the counters of Union Bank, Federal Bank, Avanti Feeds, Suven Pharma and Brightcom Group 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 BHEL, JP Associates, IFCI, CESC, and IRCTC 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
MRF (Rs 110322 crore), Page Industries (Rs 40159 crore), Honeywell Automation (Rs 39375 crore), 3M India (Rs 31124 crore), and Shree Cements (Rs 26277 crore) among others were among the most active stocks on the NSE 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
JP Power (Shares traded: 40.36 crore), Suzlon Energy (Shares traded: 17.82 crores), YES Bank (Shares traded: 15.45 crore), IRFC (Shares traded: 12.98 crore) and NBCC (Shares traded: 11.8 crores) among others were among the most traded stocks in the session on NSE.
Stocks showing buying interest
Shares of Central Bank, NHPC, IOB, PNB Housing, and NMDC 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 Penta Gold, Dangee Dums, and Brookfield India Real Estate Trust among other stocks that hit their 52-week lows, signaling bearish sentiment on the counters.
Sentiment meter favours bulls
Overall, market breadth favored bulls as 2,446 stocks ended in the green, while 1,202 names settled in the red.
(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)