Ahead of Market: 10 things that will decide stock market action on Wednesday

The Indian stock market ended in the red on Tuesday, with Nifty falling deeper on its expiry day as the stock market snapped a four-day gaining streak amid the new closing auction session-related volatility.

Sensex dropped over 210 points to close at 78,429 while Nifty 50 fell 159 points to end the session at 24,615 on Tuesday. Broader markets closed mixed, with Nifty Midcap 100 ending in the red and Nifty Smallcap 100 in the green.

Here's how analysts read the market pulse


Tuesday’s weekly expiry, combined with the implementation of the new mechanism for determining F&O closing prices, or the closing auction session (CAS), has led to a distortion in market trends, said Vinod Nair, Head of Research at Geojit Investments. He added that the significant gap between the 3:30 p.m. and 3:40 p.m. closing prices of Nifty stocks and the index, along with the divergence with Sensex, suggests that the new system is not functioning as intended, resulting in heightened price volatility. This has triggered forced square-offs of positions, particularly among retail investors, ahead of the 15 minutes blind derivatives window closing session, the analyst further said.

Fundamentally market participants remain focused on developments surrounding the Strait of Hormuz, as greater clarity and stability in the region could help ease crude oil prices and support a moderation in global bond yields, the analyst said. Meanwhile, he added that the ongoing RBI policy meeting is being closely monitored amid global uncertainties and inflation concerns.

“Investors are looking for policy measures from the RBI to address these challenges, along with liquidity support for the banking system, which could help sustain market confidence in the near term,” he said.

US stocks

The S&P 500 and the Dow hit record highs on Tuesday after strong forecasts from Caterpillar and Palantir reassured investors about AI-driven demand, while hopes for an imminent deal to end the Middle East conflict sent crude prices lower.

Palantir Technologies gained as much as 25% after raising its annual revenue forecast again, while chipmaker On Semiconductor added around 1% after forecasting quarterly revenue above ‌expectations.

Caterpillar, seen as ⁠a bellwether ⁠for the global industrial economy, gained 12% after raising its annual revenue growth forecast, benefiting from a buildout of AI data centers that has spurred demand for its power-generation and construction equipment.

Investors have been scrutinizing results from AI-linked companies this earnings season for signs that their billion-dollar investments are yielding returns. Strong results from AI leaders Microsoft and Amazon last week were a relief and have underpinned gains on Wall Street following a turbulent July.

In geopolitics, crude prices fell over 2% after a Qatari official said efforts to secure a diplomatic resolution to the conflict were continuing, while U.S. Treasury Secretary Scott Bessent said a deal with Iran to ⁠reopen the Strait of Hormuz could come as soon as Tuesday or Wednesday.

European markets

European stocks climbed alongside U.S. futures on Tuesday, although a rebound in oil prices underscored market scepticism that the U.S.-Iran war would be resolved quickly through diplomacy. Europe's STOXX 600 .STOXX was up 0.60%, with tech stocks rising 1.85%.

Tech view

Nifty 50 faced resistance at the 200-day moving average (200 DMA) and witnessed a sharp decline, but it found support around the 24,400 level, which acted as a crucial support zone for the session, said Rupak De, Senior Technical Analyst at LKP Securities. Despite the pullback, the RSI remains in a bullish crossover, indicating that the underlying momentum is still positive, he explained.

“The short-term trend is likely to remain sideways to positive as long as the index holds above 24,400. A decisive break below this level could trigger a deeper correction. On the downside, support is placed at 24,400 and 24,200, while on the upside, immediate resistance continues to remain at 24,800,” the analyst further explained.

Most active stocks in terms of turnover

Ather Energy (Rs 3,444 crore), HDFC Bank (Rs 2,344 crore), LIC (Rs 2,081 crore), KEI Industries (Rs 2,002 crore), Kalyan Jewellers (Rs 1,705 crore), ICICI Bank (Rs 1,652 crore) and RIL (Rs 1,395 crore) were among the most active stocks on NSE in value terms. Higher activity in a counter in value terms can help identify the counters with the highest trading turnovers in the day.

Most active stocks in volume terms

Vodafone Idea (Traded shares: 30.88 crore), JP Power (Traded shares: 9.3 crore), Suzlon Energy (Traded shares: 6.15 crore), LIC (Traded shares: 5.27 crore), Ola Electric (Traded shares: 4.34 crore), Yes Bank (Traded shares: 3.93 crore) and Pine Labs (Traded shares: 3.27 crore) were among the most actively traded stocks in volume terms on NSE.

Stocks showing buying interest

Ather Energy, KEI Industries, Graphite India, CG Power, Saregama India, SAIL and Apar Industries were among the stocks that witnessed strong buying interest from market participants.

52-week high

Among the ones which hit their 52-week highs on NSE included Ather Energy, Saregama India, Apollo Hospital, Siemens, Sai Life Science, Laurus Labs and Deepak Fertilisers.

Stocks seeing selling pressure

Stocks which witnessed significant selling pressure were LIC, Jain Resource Recycling, UPL, C.E. Info Systems, Prestige Estate, Oberoi Realty and Motherson Sumi.

52-week low

Among the ones which hit their 52-week lows on NSE included HDFC Life.

Sentiment meter favours bulls

Out of the 3,434 stocks that traded on the NSE on August 4, Tuesday, 1,601 stocks witnessed advances, 1,708 saw declines while 125 stocks remained unchanged.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)