12 things that will decide stock market action on Monday

Over the past week, the main Nifty index finished just 80 points while the Sensex climbed almost 180 points to end up for the second consecutive week at 15,752.05 points. Market experts citing the recent drop in global indices say the recent round of consolidation calls for caution.

Here is how analysts read the pulse of the market:

Naraj Shetti, Technical Research Analyst, HDFC Securities, said Nifty’s short-term trend continues to be limited. “But Friday’s sharp upside rally from the lows raises the possibility of more upside for the market ahead. A sustained rise above the 15,900-15,950 levels could bring the bulls back into the market and this could possibly pull the Nifty quickly towards the next bullish levels of 16,200-16,300 levels. Immediate support is placed at 15,630,” he said.

Sharekhan’s Gaurav Ratnaparkhi said that although the index started the week on a strong note, it could not build on the gains.

“It saw consolidation throughout the week. The short-term support zone was placed around 15,700-15,650, which the index broke through on July 1. However, it received support near 15,500. The overall structure shows that the index is likely to experience consolidation in the 15,500-15,900 range in the coming sessions,” Ratnaparkhi said.

That said, here’s a look at what some key indicators suggest for Monday’s action:

US stocks make big gains

Wall Street rebounded to a significantly higher close in light trading on Friday as investors embarked on the second half of the year ahead of the holiday long weekend. The three major U.S. stock indexes reversed their first losses to end in positive territory in the wake of the stock market’s worst first half in decades.

The Dow Jones Industrial Average rose 321.83 points, or 1.05%, to 31,097.26, the S&P 500 gained 39.95 points, or 1.06%, to 3,825.33 and the Nasdaq Composite added 99.11 points, or 0.90%, to 11,127.85.

European stocks end flat

European stocks closed flat on Friday as gains in defensives countered a selloff in semiconductor and commodity-related stocks, as investors braced for the first interest rate hike in the European Central Bank (ECB) in more than a decade this month. The pan-European STOXX 600 index (.STOXX) lost 0.02%.

Tech View: Harami candle on the weekly chart

Nifty50 formed a hammer-shaped candle on the daily chart on Friday. On the weekly scale, it made a bearish candle with a long lower wick. Analysts said the index is in a consolidation range, where it has strong support in the 15,500-15,600 range and hurdle in the 15,900-950 range. A decisive break on either side can move the market trend forward, they said.

F&O: traders can opt for the Bull Ladder strategy

Keeping the target between 16,000 and 16,200, we believe traders can opt for the Bull Call Ladder strategy where maximum profit will be made between 16,000 and 16,200. However, caution should be exercised on the higher side as well because the strategy will start making losses if Nifty moves. above 16350 in current settlement. Traders will take profits if Nifty remains or expires between the 15,850 to 16,350 levels, says Raj Deepak Singh, Analyst – F&O, ICICIdirect.

Stocks Showing a Bullish Bias

The Moving Average Convergence Divergence (MACD) momentum indicator showed a bullish trade setup on the counters

, Cipla and .

The MACD is known to signal 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 upward movement and vice versa.

Stocks Signal Weakness Ahead

The MACD showed bearish signs on the counters of

, and Nava Bharat Ventures. A bearish crossover on the MACD on these counters indicated that they had just begun their downward journey.

Most active stocks by value

Reliance Industries, ONGC, ITC, Titan and were among NSE’s most active stocks by value. Higher activity on a counter in terms of value can help identify counters with the highest turnover for the day.

Most active stocks by volume

ONGC, Zomato, , and were among the most traded stocks during the session on NSE.

Stocks showing buying interest

ITC shares attracted strong buying interest from market participants as they hit new 52-week highs, signaling bullish sentiment.

Stocks are under selling pressure
Vedanta, Star Health, and Star Health witnessed heavy selling pressure and hit their 52-week lows, signaling bearish sentiment on the meters.

Sentiment meter favors bulls

Overall, market breadth favored winners as 1,652 stocks ended in the green, while 1,630 names settled with cuts.

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