Here’s how analysts read the market pulse:
Independent Analyst Manish Shah pointed out two reasons which suggest the index saw a reversal.
“Firstly, an Island Reversal pattern was reversed on Monday as Nifty50 closed above the gap area. Besides, we saw a bullish Morning Star that was made at the support of a rising trendline. Nifty50 temporarily dipped below a 60-period RSI, before moving higher, giving us a buy signal,” he said.
Mazhar Mohammad of Chartviewindia.in said Monday’s bounce occurred, as Nifty50 stabilised after testing its-20 day exponential moving average (EMA) in Friday’s session. “As long as the index sustains above 17,581 level, the index would eventually test the recent life time highs at 17,950 levels,” he said.
That said, here’s a look at what some of the key indicators are suggesting for Tuesday’s action:
Wall St tumbles on sell-off in big tech
Wall Street’s main indexes tumbled on Monday as investors shifted out of technology stocks in the face of rising Treasury yields, while fresh U.S.-China concerns over trade and Taiwan offered another reason for caution. At 10:52 a.m. ET, the Dow Jones Industrial Average was down 381.04 points, or 1.11 per cent, at 33,945.42, the S&P 500 was down 62.28 points, or 1.43 per cent, at 4,294.76, and the Nasdaq Composite was down 330.72 points, or 2.27 per cent, at 14,235.98.
European shares ended lower
London’s FTSE 100 index fell on Monday as weakness in financial and travel-linked stocks offset a bounce in energy, while Morrisons dropped after private equity firm Clayton, Dubilier & Rice (CD&R) won a bid for the company. The blue-chip FTSE 100 index ended 0.2 per cent lower, extending losses for the third straight session, weighed by weakness in financials including HSBC, Prudential and Lloyds Group. The broader STOXX Europe 600 ended 0.41 per cent lower at 451.03.
Tech View: Stay neutral on long bets
Analysts said Nifty50 needed to remain above 17,580 points going ahead to be able to sustain Monday’s bounce back. However, some expressed concerns over the narrow candle body of the Nifty50 on the daily chart.
F&O: Nifty50 looks indecisive
The 17,800-strike price and 18,100-strike price call option of the Nifty50 were the most active in today’s trade indicating that traders see the index testing these levels in the coming sessions. On the put options side, 17600-strike price and 17,70-strike price saw put writing indicating that both the levels will act as support.
Stocks showing bullish bias
Momentum indicator Moving Average Convergence Divergence (MACD) showed bullish trade setup on the counters of NALCO, Arvind, Jindal Stainless, Dhani Services, Filatex India and Jindal Saw.
The MACD is known for signalling 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 signalling weakness ahead
The MACD showed bearish signs on the counters of ITC, HDFC Bank, Kotak Mahindra Bank, Alembic, Lincoln Pharma, Uflex, NRB Bearing, Alkem Labs, Minda Industries, Emami Realty, VRL Logisitics, and Saksoft. Bearish crossover on the MACD on these counters indicated that they have just begun their downward journey.
Most active stocks in value terms
IRCTC (Rs 2082 crore), Tata Power (Rs 1581 crore), Divi’s Lab (Rs 1498 crore), RIL (Rs 1288 crore), Tata Steel (Rs 1267 crore), SAIL (Rs 1021 crore), Tata Motors (Rs 1007 crore), NALCO (Rs 990 crore), NTPC (Rs 849 crore) and Bajaj Finance (Rs 838 crore) were among the most active stocks on Dalal Street 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: 20.28 crore), NALCO (Shares traded: 9.7 crore), Tata Power (Shares traded: 9.3 crore), YES Bank (Shares traded: 8.9 crore), SAIL (Shares traded: 8.6 crore), PNB (Shares traded: 6.2 crore), NTPC (Shares traded: 5.9 crore), BHEL (Shares traded: 4.4 crore), Trident (Shares traded: 4.3 crore) and Suzlon Energy (Shares traded: 4.2 crore) were among the most traded stocks in the session.
Stocks seeing buying interest
Solar Industries, NALCO, Deepak Nitrite, Aarti Industries and Divi’s Labs witnessed strong buying interest from market participants as they scaled their fresh 52-week highs, signaling bullish sentiment.
Stocks seeing selling pressure
Supreme Engineering, Krsnaa Diagnostics and Metalyst Forgings witnessed strong selling pressure and hit their 52-week lows, signaling bearish sentiment on these counters.
Sentiment meter favours bears
Overall, the market breadth remained in favour of the bulls. As many as 379 stocks on the BSE500 index settled the day in the green, while 121 settled the day in the red.
Podcast: Will the market momentum sustain?
BSE Sensex gained about 536 points to settle just shy of 59,300 mark. Nifty50 gained about 160 points but ended the day merely 9-odd points below 17,700. Broader markets outperformed as BSE midcap and smallcap indices gained 2 per cent each. Fear gauge India VIX eased more than 3 per cent, slipping below 17. What were the reasons behind the rally on Monday? Will the market momentum sustain?