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

The market confusion around the closing auction session (CAS) continues to spook investors, with Nifty’s indicative price sharply plunging 2% within seconds during the period on its monthly expiry day, before a sharp recovery on Tuesday.

Nifty traded at around 22,684 before 3:19:59 when the CAS session began. Immediately, the benchmark index’s indicative price crashed to 22,249 at 3:20:01. This implies a sharp drop of 435 points in just two seconds. The indicative then sharply spiked, wiping off all the losses recorded during this brief plunge and closing above the pre-CAS level at 22,716.

Sensex comparatively saw a stable CAS session, with the benchmark index overall closing 243 points lower at 72,529. The Indian stock market has extended losses after yesterday’s sharp crash where Sensex and Nifty plunged 1.6%.


Also read | CAS chaos: Nifty’s indicative price drops 2% in 2 seconds, later recovers on monthly F&O expiry day

Here's how analysts read the market pulse

While Nifty’s sharp volatility was noteworthy, the market sharply recovered from day’s lows. Sensex and Nifty had dropped around 1% earlier in the day, but recovered most of the losses by the end of the session to close up to 0.3% lower. However, they continue to record losses amid multiple headwinds.

Domestic equities continue to face correction-led headwinds amid volatile crude prices, US Treasury yields hovering near two-decade highs, and persistent FII outflows exerting pressure on the rupee, said Vinod Nair, Head of Research at Geojit Investments. Adding to the pressure, the unprecedented pace of IPO fundraising is absorbing incremental liquidity, he added.

Investor risk appetite remains subdued against a hawkish global backdrop amid rising odds of additional rate hikes later in the year,” the analyst said. While geopolitical tensions will continue to shape near-term sentiment, market focus is gradually shifting towards Q2 earnings, with expectations already tempered versus Q1, he added.

A meaningful de-escalation of the US-Iran conflict could trigger a sharp relief rally driven by improved risk sentiment, but until then, investors are likely to remain selective, favouring fundamentals and earnings visibility over broad-based market exposure, according to Nair.

US stocks

The benchmark S&P 500 was flat on Tuesday, as rising government bond yields hurt risk sentiment and offset gains in AI-related stocks driven by optimism about Anthropic's plan to go public.

The yield on the benchmark 10-year Treasury bond climbed to 5.078% — near its highest level since 2007 — strengthening expectations of a tighter monetary policy.

Oil prices retreated, but concerns that energy-driven inflation would force central banks to keep interest rates elevated for longer hit risk assets.

European markets

European shares rose on Tuesday, as technology stocks led gains on the back of renewed AI optimism and offset concerns stemming from higher oil prices and bond yields.

The pan-European STOXX 600 was up 0.7% at 642.94 points. Most other regional indexes also traded higher. The STOXX 600's tech sector surged 2.5% to a six-week high.

Also read | Will RBI announce steep rate hikes? Nomura sees up to 50 bps increase by Dec, dismisses 125 bps hike fears

Most active stocks in terms of turnover

BSE (Rs 9,579 crore), HDFC Bank (Rs 3,053 crore), RIL (Rs 2,872 crore), Wipro (Rs 2,583 crore), SBI (Rs 2,569 crore), Policybazaar (Rs 2,122 crore), and ICICI Bank (Rs 1,920 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: 115 crore), Wipro (Traded shares: 16.45 crore), Yes Bank (Traded shares: 13.73 crore), Ola Electric (Traded shares: 11.82 crore), Suzlon Energy (Traded shares: 6.18 crore), HDFC Bank (Traded shares: 4.28 crore) and REC (Traded shares: 3.98 crore) were among the most actively traded stocks in volume terms on NSE.

Stocks showing buying interest

Kirloskar Oil, Sun TV, Adani Enterprises, HFCL, Glenmark Pharma, Adani Ports SEZ and Mankind Pharma 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 Cadila Healthcare, Welspun Corp. and Indegene.

Stocks seeing selling pressure

Stocks which witnessed significant selling pressure were PB Fintech, Coromandel International, Amber Enterprises, Honasa Consumer, KFin Tech, Patanjali Foods and Sonata Software.

52-week low

Among the ones which hit their 52-week lows on NSE included PB Fintech, Bikaji Foods International, IEX, Voltas, DCM Shriram, Havells India and Blue Dart.

Disclaimer: This article has been written by Debaroti Adhikary, who is not a SEBI-registered Research Analyst or an Investment Adviser. Debaroti Adhikary and his/her ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclaimers here