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

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RBI on Thursday made its first decisive move to counter the coronavirus-triggered market volatility.
NEW DELHI: After the worst intraday crash in the history of Indian stock market, several analysts said the bears are not done yet, while investors looked drained of confidence to nibble even at the blue chips that were going abegging at mouth-watering prices.

The 2,919-point, or 8.18 per cent, tumble in the Sensex wiped out some Rs 11.30 lakh crore in equity investors wealth. And after a 868-point drop, Nifty was perilously poised at its key support at 9,500, below which it may plumb a bottom anywhere between 8,600 and 8,100.

The equity indices have since entered the bear market territory, after logging the biggest single-day fall ever in the absolute terms. Markets globally turned jittery and went into a tailspin after WHO declared the coronavirus as a pandemic, triggering a major risk aversion and selloff in equities on fears of a global economic recession. WHO's declaration triggered travel bans globally, and sent shock waves across financial markets.

“We won’t be able to time the market in terms of bottom, but can systematically stagger the buying on such panic days in stages as a strategy. High quality positive cash flow generating businesses are the best option in uncertain times like this,” said Paras Bothra, President Equity Research, Ashika Stock Broking.

Here’s what indicators are suggesting for the stock market action on Friday:

RBI announces $2 billion money shot
The Reserve Bank of India on Thursday made its first decisive move to counter the coronavirus-triggered market volatility by opening a US dollar–Indian Rupee swap window of $2 billion, and kept options open to provide as much as the market needs with its coffers full.

Wall Street enters bear market
The S&P 500 and the Nasdaq cratered into a bear market on Thursday, as a shock move by Donald Trump to suspend travel from Europe rattled investors already shaken by fears of a global recession on the back of a coronavirus pandemic, Reuters reported. At 8.30 pm IST, Dow Jones was trading 8.07 per cent or 1,899.69 points down at 21,653.53, while Nasdaq Composite and S&P 500 were down up to 6.50 per cent.

European shares set for worst ever day
European shares were on track for a record loss on Thursday, hitting a near seven-year low after the ECB held off on a rate cut, further upsetting markets reeling from US travel ban. At 8.30 pm IST, Euro Stoxx 50 index was down 9.91 per cent at 2,617.73, while benchmark indices from Germany, France and the United Kingdom were down up to 10 per cent.

Tech View: Bears not done with Nifty assault
Nifty saw its biggest-ever fall in history, cracking below the 9,600 mark in a brisk selloff. In the process, the index formed a Long Bearish Candle on the daily chart. Analysts said the index could now head for levels up to 8,900, if the 9,550-9,500 range is broken next session.

F&O: Next Nifty supports at 9,119 and 8,970
On the options front, maximum Call open interest stood at 12,000 and then 10,000 levels while maximum Put OI was at 9,500 and then 9,000 levels. Options data lay scattered at various strike prices as many Put writers got trapped in the market fall. Even unwinding pressure kept the Street under pressure. Call writing was seen at 10,000 and then 10,200 levels while there was Put writing at 9,000 and then 9,500 levels, sliding lower day by day with the lower market range. Options data indicated a shift in wider trading range between 9,000 and 10,000 levels.

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Stocks showing bullish bias
Momentum indicator Moving Average Convergence Divergence (MACD) showed bullish trade setup on the counters of Banco Products, Bhansali Engineering, MBL Infrastructures, Shemaroo Entertainment, Weizmann, Xelpmoc Design and Beardsell. 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 bearish bias
The MACD showed bearish signs on the counters of HPCL, Sun Pharma, Cipla, India Cements, Jammu & Kashmir Bank, Indian Overseas Bank, NOCIL, Welspun Enterprises, Britannia Industries, Thomas Cook, Navin Fluorine, Jyothy Labs, Gujarat Pipavav Port, Dixon Technologies, Cera Sanitaryware, Khadim India, Pitti Engineering, Pfizer, Eris Lifesciences, Finolex Industries, Sanofi India, ARSS Infrastructure, Deccan Cements and Nagreeka Capital. Bearish crossover on the MACD on these counters indicated that they have just begun their downward journey.

Thursday’s most active stocks in volume terms
Vodafone Idea (shares traded: 74.15 crore), YES Bank (shares traded: 33.73 crore), Tata Motors (shares traded: 14.35 crore), SBI (shares traded: 9.98 crore), GMR Infra (shares traded: 9.54 crore), ONGC (shares traded: 7.61 crore), Motherson Sumi (shares traded: 6.84 crore), IDFC First Bank Ltd. (shares traded: 5.70 crore), ITC (shares traded: 5.20 crore) and ICICI Bank (shares traded: 5.08 crore) were among the most traded stocks in the session.

Thursday’s most active stocks in value terms
HDFC Bank (Rs 3,056.61 crore), RIL (Rs 2,752.57 crore), SBI (Rs 2,201.04 crore), ICICI Bank (Rs 2,200.39 crore), Bajaj Finance (Rs 1,974.26 crore), HDFC (Rs 1,698 crore), Axis Bank (Rs 1,635.23 crore), TCS (Rs 1,583.94 crore), IndusInd Bank (Rs 1,299.28 crore) and Tata Motors (Rs 1,282.08 crore) were among the most active stocks on Dalal Street on Thursday in value terms. Higher activity on a counter in value terms can help identify the counters with highest trading turnovers in the day.

Stocks seeing buying interest
Bafna Pharmaceuticals, Geekay Wires and Ruchi Soya Industries witnessed strong buying interest from market participants as they scaled their fresh 52-week highs on Thursday signalling bullish sentiment.

Stocks witnessing selling pressure
Adani Power, Motherson Sumi, Glenmark Pharma, Future Retail and Adani Transmission witnessed strong selling pressure in Thursday’s session and hit their 52-week lows, signalling bearish sentiment on these counters.