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

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Back home a gradual easing of lockdown measures in major global economies lifted domestic equity benchmarks for the third session in a row.
NEW DELHI: A claim by American biopharmaceutical company Gilead Sciences that its experimental antiviral drug, remdesivir, had met the main goal of a trial testing it in Covid-19 patients lifted the mood across financial markets later on Wednesday.

The news made Wall Street shrug off adverse economic data in the US in early deals. US GDP in the first quarter contracted 4.8 per cent, compared with estimates of a 3.5 per cent drop, the Bureau of Economic Analysis reported Wednesday. This was the first negative reading since the first quarter of 2014, though not as bad as the worst of the financial crisis. Economists expect the Q1 reading to decline even more when the final revisions are issued.

Back home a gradual easing of lockdown measures in major global economies lifted domestic equity benchmarks for the third session in a row.

Metals and financial stocks rallied and that helped BSE Sensex to log 605-point surge to 32,720 level. Nifty settled 172 points higher at 9,553.

Analysts said March quarter earnings of index heavyweights Reliance and HUL and US Federal Reserve's monetary policy decision overnight will provide further cues for market’s direction on Thursday, when the April series F&O contracts are due to expire.

Here’s a look at what some of the key indicators are suggesting for Thursday’s market action:

Fed keeps zero-rate pledge; sees ‘medium-term’ pandemic risks
Federal Reserve officials restated their pledge to hold the benchmark interest rate near zero and will keep buying bonds, judging that the coronavirus pandemic “poses considerable risks to the economic outlook over the medium term.” The Federal Open Market Committee said in a unanimous statement Wednesday in Washington that it “will use its tools and act as appropriate to support the economy.” Officials Wednesday left unchanged their vague guidance on the future path of rates.

US shares jump on hopes of potential coronavirus drug
Wall Street jumped on Wednesday as Gilead Sciences gave an encouraging update on a potential COVID-19 treatment and upbeat earnings from Google-parent Alphabet boosted shares of other technology and internet giants. Gilead rose 4.8% after the drugmaker said its experimental antiviral drug remdesivir helped improve symptoms for COVID-19 patients who were given the drug early. At 8 p.m. (IST) the Dow Jones Industrial Average was up 422.64 points, or 1.75%, at 24,524.19, the S&P 500 was up 58.81 points, or 2.05%, at 2,922.20 and the Nasdaq Composite was up 233.27 points, or 2.71%, at 8,841.01.

European shares flat as defensives offset upbeat earnings
European shares struggled to maintain early gains on Wednesday, as a slide in defensive stocks countered upbeat forecasts from German automakers and sensor specialist AMS as well as a bounce in oil prices. The pan-European STOXX 600 rose as much as 0.3% but turned flat as healthcare, technology and personal & household goods - sectors that have held steady in the wake of the health crisis - dropped between 0.3% and 1.4%.

US Q1 GDP shrinks 4.8%
GDP in the first quarter contracted 4.8%, compared with estimates of a 3.5% drop, the Bureau of Economic Analysis reported on Wednesday. This was the first negative reading since the first quarter of 2014, though not as bad as the worst of the financial crisis. Economists expect the Q1 reading to decline even more when the final revisions are issued.

Tech View: Nifty’s next key hurdle at 9,400
Nifty50 on Wednesday took out its immediate resistance at 9,400 level with a bang. Analysts were expecting the index to gain at least 200 points on a decisive breach of this level. Eventually Nifty formed a bullish candle on daily scale and managed to close well above its hurdle of 9,400 zones which is 38.20% retracement level of the entire fall from 12,430 to 7,511 levels. Analysts expect the index to trend up towards the 9,600-9,700 range. For the day, the index added 172 points, or 1.84 per cent, to close above the 9,550 mark at 9,553. Check out Top Candlestick Patterns for the day.

F&O: Options signal Nifty range at 9,400-9,700
Option data indicates an immediate trading range in between 9400 to 9700 zones. Put writing at immediate strikes suggests continuation in positive stance even for some short covering move ahead of the monthly expiry day. India VIX moved down by 4.30% at 33.84 levels and it has been cooling down from last six trading sessions. It has also falling from last four consecutive weeks which is providing some stability to bulls. Rising Put Call Ratio with falling Volatility suggests shift in the higher trading zones with dips could continue to bought into the market.

Stocks showing bullish bias
Momentum indicator Moving Average Convergence Divergence (MACD) on Wednesday showed bullish trade setup on the counters of Advanced Enzyme Tech, Poly Medicure, Abbott India, Hindustan Food and Ponni Sugars (Erode) . 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 A2Z Infra Engineer, Emami Realty, Paramount Communications, Vivimed Labs, California Softwares, Jindal Photo, Delta Manufacturing and Asian Hotels (West) . Bearish crossover on the MACD on these counters indicated that they have just begun their downward journey.

Most active stocks in value terms
Bajaj Finance (Rs 3490.66 crore), Axis Bank (Rs 2699.12 crore), HDFC Bank (Rs 2693.04 crore), RIL (Rs 2460.91 crore), IndusInd Bank (Rs 2215.48 crore), HDFC (Rs 2141.88 crore), ICICI Bank (Rs 1434.01 crore), SBI (Rs 1077.00 crore), Kotak Bank (Rs 888.97 crore) and Indiabulls Housing Finance (Rs 863.11 crore) were among the most active stocks on Dalal Street on Wednesday 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: 34.61 crore), Motherson Sumi (Shares traded: 8.13 crore), Indiabulls Housing Finance (Shares traded: 6.79 crore), Axis Bank (Shares traded: 6.15 crore), SBI (Shares traded: 5.74 crore), SAIL (Shares traded: 4.74 crore), IndusInd Bank (Shares traded: 4.73 crore), YES Bank (Shares traded: 4.24 crore), Ashok Leyland (Shares traded: 4.21 crore) and Tata Motors (Shares traded: 4.08 crore) were among the most traded stocks in the session.

Podcast: Is this market in an uptrend?

Wednesday’s was a broadly a session of the largecaps; as midcaps and smallcaps continued to underperform, rising 1 per cent each. Sectorally, BSE Metals, Finance, TECk and IT indices were the big winners, while the FMCG index closed in the red. Analysts said the market is in a medium-term uptrend. Thursday’s F&O expiry to test the market resilience.

Stocks showing buyers’ interest
AstraZeneca, Ruchi Soya Industries and Aarti Industries witnessed strong buying interest from market participants as they scaled their fresh 52-week highs on Wednesday signalling bullish sentiment.