MUMBAI: Nifty50 formed a long black day candle on the daily chart on Friday as it succumbed to short pressure and closed at the lower end of a bullish channel on the hourly chart.


Here’s how analysts read the pulse of the market:

Mazhar Mohammad of Chartviewindia.in said that Nifty50 appears to have experienced another outage as it closed below its 14 day ascending channel with some sort of Long Black Day type candle formation. This distribution projects a target at the 16,450 level.

Sharekhan’s Gaurav Ratnaparkhi said the near-term range has moved lower for Nifty50 to 16,780-17,400 levels. “The overall structure shows that this week’s drop is part of the base-building process and the index is likely to attract buy support close to the recent low of 16,782,” he said. .

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


Wall Street closes the week with cuts


Wall Street ended lower on Friday, weighed down by Big Tech as investors worried about the Omicron variant of the coronavirus and digested the Federal Reserve’s decision to end its pandemic-era stimulus more quickly. The three major US stock indexes ended the week lower. In Friday’s session, the Dow Jones Industrial Average fell 1.48% to end at 35,365.44 points, while the S&P 500 lost 1.03% to 4,620.64. The Nasdaq Composite fell 0.07% to 15,169.68.


Omicron worries about falling European stocks

Banks and luxury stocks led declines on Friday, pushing European stocks into the red for the week which saw hawkish signals of a flurry from major central banks and growing concerns over the economic impact of the variant of the Omicron coronavirus. The pan-European STOXX 600 index fell 0.6% after recovering on Thursday when the European Central Bank eased stimulus slightly but pledged to support the economy.



Tech View: More weaknesses to come


Analysts said Nifty50 fell below the 61.8% Fibonacci retracement of its recent rise from the 16,780 mark. The index could now take initial support at around 16,782 points, but it could experience a drop to 16,450.


M&O: More likely consolidation


In the derivatives segment, traders have bought put options out of the money of Nifty50, which suggests that they see more losses in the market going forward. The put option at the strike price of 16,500 recorded the largest addition of open interest, indicating that the index may test this level soon.


Stocks showing a bullish bias


The Moving Average Convergence Divergence (MACD) momentum indicator showed a bullish trade pattern on the counters of Syntex Plastics, L&T Infotech, Trent, Viji Finance and Ganesh Housing.

The MACD is known to signal trend reversals of securities or indices traded. When the MACD crosses above the signal line, it gives a bullish signal, indicating that the price of the security may experience an upward movement and vice versa.


Stocks signal weakness ahead


The MACD showed bearish signs on the counters of Vodafone Idea, Indiabulls Housing, Suzlon Energy, Zee Entertainment and Indian Energy Exchange. A bearish cross on the MACD on these counters indicated that they had just started their downward journey.


Most active stocks in terms of value


Wipro (Rs 3485 crore), Infosys (Rs 3443 crore), Indiabulls Housing (Rs 2414 crore), RIL (Rs 2280 crore), TCS (Rs 1564 crore), Zomato (Rs 1296 crore), Tata Motors (Rs 1294 crore) , HDFC (Rs 1,188 crore), Bajaj Finance (Rs 1,167 crore) and HDFC Bank (Rs 1,109 crore) were among the most active stocks on Dalal Street in terms of value. Higher activity on a meter in terms of value can help identify meters with the highest turnover for the day.


Most active stocks in terms of volume


Vodafone Idea (Shares traded: 32.7 crore), YES Bank (Shares traded: 11.1 crore), Indiabulls Housing (Shares traded: 10.3 crore), Zomato (Shares traded: 9.5 crore), BHEL (Shares traded: 6.1 crore), Wipro (shares traded: 5.2 crore), Suzlon Energy (shares traded: 4.8 crore), PNB (shares traded: 4.7 crore) and Tata Power (shares traded: 3 , 9 crore) were among the most traded stocks during the session.


Stocks showing buying interest


Tata Tele, Persistent Systems, Borosil, Grindwell Norton and Brightcom Group saw strong buying interest from market participants as they increased their new 52-week highs, signaling bullish sentiment.


Stocks see the pressure to sell


Dhani Ventures, Aditya Birla Sun Life AMC and Akzo Nobel saw strong selling pressure and hit their 52 week lows signaling bearish sentiment on these counters.


The sentiment counter favors bears


Overall, the breadth of the market has remained in favor of bears. No less than 62 stocks of the BSE500 index settled the day in the green, while 438 settled the day in the red.


Podcast: Will the larger markets continue to decline?
Sensex tallied around 890 points and settled a dozen points above 57,000. The index has lost around 1,800 points in the past five sessions. Its larger counterpart, Nifty50, lost more than 260 points and finished the week at 16,985. The index had lost more than 525 points last week. Larger markets underperformed major competitors, with mid and small cap BSE indices falling, falling 2% each. The India VIX fear gauge has risen sharply by around 3% and crossed 16 levels. Will larger markets decline further?