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Indian markets could open lower, in line with Asian markets’ performance over yesterday and today and despite overall positive move in US markets over Tuesday and Wednesday - HDFC Securities

U.S. stocks fell for a second session on Tuesday, as concerns about rising coronavirus cases globally offset healthy U.S. corporate earnings reports for the first quarter. The U.S. State Department on Monday urged Americans to reconsider any international travel they may have planned and said it would issue specific warnings not to visit roughly 80% of the world’s countries due to risks from the coronavirus pandemic.

U.S. equities had their biggest outflows last week since midNovember and the fifth largest since 2008, according to a BofA Global Research report on Tuesday. Investors sold a net $5.2 billion in U.S. equities, with retail clients being the only buyers last week as the S&P 500 index rose to an all-time high.

U.S. stocks finished Wednesday higher, ending a two-day losing streak, as investors looked past concerns that rising COVID-19 infections around the world could slow economic growth. U.S. stocks on Wednesday halted a two-session skid, with Dow and S&P just shy of records and small-cap stocks outperforming as the investors favor stocks that might benefit from economic recovery as businesses reopen as more of the population becomes fully vaccinated.

A missile launched from Syria struck southern Israel early Thursday, setting off air raid sirens near the country’s top-secret nuclear reactor, the Israeli military said. In response, it said it attacked the missile launcher and air-defense systems in neighboring Syria.

U.S. corn futures rose to hit a fresh near 8-year high on Thursday as concerns about global supplies were stoked by adverse weather in several major growing regions. Soybean futures are also at their highest in 7 years.

Asian stocks rose on Thursday, extending a rebound in global markets following a sharp selloff earlier this week, while oil prices eased again on worries about rising COVID-19 cases in some parts of the world. The European Central Bank decides policy later on Thursday, with no change expected.

Indian Benchmark equity indices extended their decline to a second session on April 20 even as Maharastra added to lockdown-like curbs amid rampant Covid cases. At close, the Nifty was down 63.10 points or 0.44% at 14,296.40. The broader markets did better with the S&P BSE MidCap and S&P BSE SmallCap indices both ending 0.5% higher

Nifty once again failed to hold on to higher levels facing selling pressure on April 20. However the broader market did well on April 20. It took support again from 14207. However repeated testing of 14200 is not a good sign. 14200-14505 is the new band for the Nifty for the near term. A breach of 14200 again could result in accelerated selling.

Daily Technical View on Nifty

Observation:

After showing a sharp weakness on Monday, Nifty witnessed lack of strength to sustain the intraday highs on Tuesday, it witnessed high volatility and finally closed the day lower by 63 points. Nifty opened on an upside gap of 169 points and started to show intraday weakness from the day's high since opening. The weakness got intensified in the mid to later part and Nifty able to show minor upside recovery from near the support of 14200 towards the end.

A long bear candle was formed on the daily chart with minor lower shadow. Technically, this pattern could mean a possibility of sharp downside breakout of the crucial lower support of 14200 levels. The opening upside gap of Tuesday has been filled completely and the opening downside gap of Monday has been partially filled (left by small margin).

The Nifty has been showing lack of strength to sustain the highs recently and we observe a formation of consistent lower highs and repeated testing of lower 14200 supports. After showing upside bounces from the lower supports for few occasions, Nifty is now placed to show decisive downside breakout of the lower support as well as the range movement of the last one month.

As per the present high low range, a sustainable move below 14150 levels is expected to open a broad based weakness in the market and the potential downside target of the range theory to be watched around 13500 levels.

Conclusion: The lack of strength to sustain the highs continued in the market and the Nifty is now placed at the crucial support juncture of around 14200-14150.

The chances of downside breakout seems higher and a decisive downside breakout is likely to drag Nifty down to 13500 levels in a quick period of time. Any upside bounce from here could find strong resistance around 14370.

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