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Indian markets could open higher, in line with positive Asian markets today and positive US markets on Thursday.

The Dow Jones Industrial Average booked a new record for a second straight day on Thursday in a volatile session that saw stocks swing to gains in the last hour of trading. Investors were buoyed by a report showing weekly jobless benefit claims were at the lowest level in the COVID era, ahead of the April nonfarm payrolls and unemployment report due on Friday.

First-time claims for unemployment insurance totaled 498,000 for the week ended May 1, hitting a fresh pandemic-era low and better than a Dow Jones estimate of 527,000. In other U.S. economic reports, U.S. productivity rose at a 5.4% annual rate in the first quarter, while unit labor costs were down at a 0.3% rate over the same period.

Rising asset prices in the stock market and elsewhere are posing increasing threats to the financial system, the Federal Reserve warned in the semi annual financial stability report Thursday.

China’s services sector expanded at the sharpest pace in four months in April, driven by fast growing new businesses, a private survey showed on Friday, although surging costs are likely to weigh on growth over the coming months. The Caixin/Markit services Purchasing Managers’ Index (PMI) rose to 56.3, the highest since December when the same reading was registered and up from 54.3 in March. The Caixin China General Composite PMI came in at 54.7 in April, stronger than 53.1 the previous month and hit the highest level this year.

The Bank of England on Thursday voted 8-1 that the pace of continuing government bond purchases can be “slowed somewhat.” Retail sales in the euro zone beat expectations with a 2.7% rise in March as curbs on shoppers eased. The Brazilian real rose 1.5% to 5.2831, its highest level since January after the central bank increased its benchmark rate by 75 basis points to 3.5% late on Wednesday. The central bank also hinted at another rate hike in June to help curb rising inflation and support an economy hurt by the COVID-19 pandemic.

Aluminum prices approached levels last seen in 2018 and copper flirted with 10-year peaks as investors bet on a rapid global recovery from the pandemic, led by the United States. Gold Futures surged $31.40, or 1.8%, to settle at $1,815.70 an ounce, its highest since Feb. 12 on Comex as the weaker dollar and easing Treasury yields propelled the precious metal.

Asian stocks opened slightly higher after U.S. indices gained on positive economic data and ahead of the U.S. jobs report due later in the day that might provide some indication on what the Fed could do next.

Indian benchmark equity indices rose for the second straight day on May 06 following healthy global cues. At close, Nifty gained 0.73% or 107 points to 14,724.80.

Daily Technical View on Nifty

Observation

Markets rallied further on Thursday to close with healthy gains for the second consecutive session. The Nifty finally gained 106.95 points or 0.73% to close at 14,724.8. Broad market indices like the BSE Mid Cap index gained more, thereby out performing the Sensex/Nifty. Market breadth was positive on the BSE/NSE.

Sectorally, the top gainers were the BSE Metal, Auto and IT indices. There were no losers.

Zooming into the 15 minute chart, we can see that the Nifty opened with an up gap on Thursday. While there was some selling pressure thereafter, the index soon proceeded to climb higher for the rest of the trading session to close at the highs of the day.

The index thus managed to hold above the previous session’s low and has now made higher bottoms at 14611 and 14671. This is a positive signal for the very near term.

It will be important that the Nifty holds above the recent low of 14611 for the very near term uptrend to continue.

On the daily chart, while the Nifty has recently corrected from the high of 15044, the index continues to hold above a rising trend line that has held the important lows of the last few months. This implies that the index remains in an intermediate uptrend.

With the healthy bounce back seen in the last two sessions, traders will need to watch if the Nifty can now continue to hold above the crucial supports of 14506-14461 in the very near term. Upside acceleration is likely to pick up once the immediate resistance of 14744 is taken out.

These are crucial resistances as they also roughly correspond to the 50 day SMA. In this scenario, the Nifty could once again be headed towards the recent highs of 15044.

Conclusion: The 1-2 day trend of the Nifty remains up with the index managing to hold above the previous session’s low and making higher bottoms at 14611 and 14671 levels before closing near the highs of the day.

On the larger daily timeframe, an upward sloping trend line continues to support the index with the Nifty also bouncing back strongly over the last two trading sessions and holding above the recent lows of 14506- 14461. We therefore stick with our view that the Nifty could move higher in the coming sessions.

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