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Indian markets could open lower continuing the weakness from Monday despite mixed Asian markets today and despite mixed US markets on Monday .- HDFC Securities

U.S. stock benchmarks finished mixed on Monday as investors kicked off a holiday-shortened week, with the Dow industrials snapping a three-day losing streak and the Nasdaq Composite posting its biggest daily drop in almost two weeks. Equities gave up earlier gains that followed President Joe Biden’s decision to nominate Federal Reserve Chairman Jerome Powell to a second term as head of the U.S. central bank, as widely expected.

The 10-year Treasury note yields 1.625%, up 9 basis points from 1.535% on Friday as investors continued to process higher inflation and higher rates in the COVID-19 recovery. Elsewhere, there was some optimism for China policy easing, after the People’s Bank of China reportedly cut several phrases about policy restraint in a report. Staying on the geopolitical front, Russian stocks tumbled amid U.S. and Europe concerns about a Russia troop buildup on Ukraine border. Russia's rouble slumped to four-month lows on Monday. Ukrainian government bond prices tumbled to their lowest in more than a year, while the Ukrainian currency slipped to seven-week lows against the dollar.

The Central Bank of Paraguay raised its monetary policy interest rate by 125 basis points to 4.0% on Monday, hiking the key rate for the second consecutive month in an attempt to curb inflation as the economy recovers from last year's COVID-19 lockdown. Asia’s stock market slipped Tuesday after Treasury yields and the dollar jumped as Jerome Powell’s renomination to head the Federal Reserve fueled bets on quicker policy tightening.

Nifty fell for the fourth consecutive session falling the most in terms of points in 7 months on November 22. At close, Nifty was down 1.96% or 348 points at 17417. Indian markets are the worst performers in the Asian region for the day. Nifty has extended the downturn, as expected, but the fact that it did not close at its low is some consolation. 17360 and then 17190 could be the supports for Nifty while 17613 could be a resistance in the near term

Daily Technical View on Nifty

Market: Observation

* Markets corrected sharply on Monday. Selling was seen through the day after a weak opening. A bounce back in the last one hour of trade helped to curb the losses. It was the fourth consecutive negative daily closing for the Nifty. The Nifty finally lost 348.3 points or 1.96% to close at 17,416.5.

* Broad market indices like the BSE Mid Cap and Small Cap indices lost more, thereby under performing the Sensex/Nifty. Market breadth was negative on the BSE/NSE.

Nifty: 15 min chart indicates more weakness

*  Zooming into the 15 minute chart, we can see that though the Nifty recovered from the lows, the index remains in a short term downtrend.

* This is evidenced by the lower tops and lower bottoms seen in the last five trading sessions. Also the 20 period MA continues to remain below the 50 period MA. While short term bounces are possible, we expect the downtrend to continue. Downside targets are at 17254.

Nifty: 50 day SMA under threat

On the daily chart, we can see that the Nifty has corrected further and is now well below the 50 day SMA. With large caps like Reliance and Tata Steel still looking weak on the daily charts, there is a good chance that Nifty could move down further in the coming sessions. Immediate downside targets for the Nifty are now at 17254. Pullback rallies could find resistance at 17805.

Nifty – Daily Timeframe chart

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