The 30-stock BSE Sensex index fell 1,017 points, or 1.24 percent, to close at 81,183, while the broader NSE Nifty index fell 293 points, or 1.17 percent, to close at 24,852.
Meanwhile, in line with the global trend, Indian stock markets may face further declines on Monday following the latest US employment data, adding uncertainty to the outlook for a Federal Reserve interest rate cut. The US Labor Department reported that employment growth in August was lower than expected at 142,000, while July job gains were revised down to 89,000, also below expectations.
Here’s what analysts are predicting for the market:
“Technically, the index broke out of the 25,000-25,100 support zone on Friday and formed a bearish engulfing candle on the weekly basis. On the daily chart, Nifty closed below the 21-day exponential moving average (DEMA), indicating further weakness. The next major support is around 24,480, where the 50-DEMA is located. In the short term, any bounce should be seen as a profit-booking opportunity,” said Hrishikesh Yedve, of Ashit C Mehta Investment Intermediates.
Jatin Gedia of Sharekhan said, “On the daily chart, we can see that Nifty has reached the critical support zone of 24850-24800 on the downside, which coincides with the 20-day moving average and the 38.2% Fib retracement level. We expect Nifty to hold this support zone and hence, we continue to remain positive on Nifty in the near term. The immediate hurdle is 25000.” That said, here is what some key indicators suggest about Monday’s move:
US Market:
U.S. stocks fell on Friday as traders remained uncertain about how far the Federal Reserve will cut interest rates even as employment data showed the labor market continued to slow. All three major indexes fell, led by declines in communication services, consumer discretionary and technology stocks, dragging down 11 sectors of the S&P 500 index.
The S&P 500 and Dow posted their biggest weekly declines since March 2023, while the Nasdaq posted its biggest weekly drop since January 2022.
European stocks:
European stocks fell for a fifth straight session on Friday, their worst day since early August, after widely expected U.S. jobs data sent mixed signals about the possibility of the Federal Reserve cutting interest rates later this month.
The pan-European STOXX 600 index fell 1%. The index ended a four-week streak of gains and fell 2.5% for its worst weekly performance since the week ended Aug. 2.
In Europe, all major stock indexes fell by around 1%, with Germany’s DAX index falling 1.6% to its lowest in two weeks after industrial production fell 2.4% in July, compared with analysts’ expectations of a 0.3% decline.
Technical Perspective: Bearish Engulfing Candle
The Nifty index formed a bearish engulfing candle on the weekly chart and ended the trading session on a negative note on Friday as the index fell sharply ahead of the crucial US employment data that may influence the Federal Reserve’s decision on the pace and magnitude of interest rate cut.
A long bear candlestick has formed on the daily chart, which indicates a sharp downside reversal in the market. The cluster support at 25,000 has been decisively breached on the downside, leading to Nifty closing lower. This pattern indicates a confirmation of a short-term top reversal pattern at 25,333 levels, said Nagaraj Shetty, Director, HDFC Securities.
In the open interest (OI) data, the call side saw the highest OI at strike prices of 25,000 and 24,900, while the put side saw the highest OI at strike prices of 24,600, followed by 24,800.
Stocks exhibiting a bullish bias:
Momentum indicator Moving Average Convergence Divergence (MACD) indicated bullish trading in stocks like Supreme Industries, Gland Pharma, PNC Infratech, 3M India and Godawari Power.
The MACD is known to signal trend reversals in the securities and indices being traded. When the MACD rises above its signal line, it is a bullish signal, indicating that the security’s price may rise and vice versa.
Stock prices signal weakness going forward:
MACD has shown bearish signs in stocks like RR Kabel, Tata Power, Crompton Greaves, Tech Mahindra, Allcargo Logistics etc. The bearish crossover of MACD in these stocks indicates that the downward trend has just begun.
Most Active Stocks by Value:
Indigo Paints (Rs 3,626 crore), SBI (Rs 3,180 crore), RIL (Rs 2,849 crore), Vodafone Idea (Rs 2,570 crore), HDFC Bank (Rs 2,134 crore), Zomato (Rs 1,963 crore) and Tata Technologies (Rs 1,477 crore) were among the most active stocks in terms of value traded on the NSE. Stocks with high volume traded in terms of value traded help identify the stocks with the highest trading volume for the day.
Most active stocks by trading volume:
Vodafone Idea (shares traded: 1.92 billion), YES Bank (shares traded: 800 million), Zomato (shares traded: 760 million), Easy Trip Planners (shares traded: 670 million), Canara Bank (shares traded: 600 million), Suzlon Energy (shares traded: 430 million) and HFCL (shares traded: 440 million) were among the most traded stocks during the NSE trading session.
Stocks showing buying interest:
Shares of stocks like Godfrey Phillips, Glenmark Life, Sven Pharma, Piramal Pharma, PI Industries, UTI AMC and Jubilant Life rose to new 52-week highs, indicating bullish sentiment and strong buying interest from market participants.
Stocks seeing selling pressure:
None of the major stocks hit 52-week lows on Friday.
Sentiment Meter Favors the Bears:
Overall, market breadth was in favor of the bears as 2,649 stocks declined and 1,307 stocks advanced.
(Disclaimer: The recommendations, suggestions, views and opinions expressed by the experts are their own. They do not represent the views of The Economic Times)
