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Indian markets could open flat to mildly higher, despite largely negative Asian markets today and mixed US markets on Thursday.- HDFC Securities

US stocks closed mixed on Thursday, with the S&P 500 index and Nasdaq Composite bouncing off session lows in midafternoon after investors weighed mostly upbeat U.S. economic data, corporate earnings reports, and a second day of testimony by Federal Reserve Chairman Jerome Powell.

Initial jobless claims fell by 26,000 to 360,000 in the seven days ended July 10 –a 16 month low - matching the forecast of economists polled by The Wall Street Journal. Powell, in an appearance before the Senate Banking Committee told lawmakers that inflation has risen significantly and would likely remain high for a few months before moderating.

U.S. industrial production rose 0.4% in June, the Federal Reserve reported Thursday, but a shortage of semiconductors contributed to a 6.6% drop in production of motor vehicles and parts. Excluding autos, industrial output rose 0.8% in the month. Official data showed that the United Kingdom reported the highest daily increase in COVID-19 cases since Jan. 15.

India’s foreign trade continued to normalise in June amid a pickup in imports. Merchandise trade deficit widened to $9.4 billion last month from $6.3 billion in May. Merchandise exports rose by 0.7% month-on-month to $32.5 billion. Merchandise imports rose 8.6% to $41.8 billion. On an annual basis, exports rose 48.3% and imports increased 41.9%, led by a low base.

Shares in Asia-Pacific mostly fell in Friday morning trade after concerns about the economic growth outlook came to the fore. Indian benchmark equity indices closed at record highs on July 15 aided by gains in IT, Realty and Capital Goods stocks. At close, the Nifty settled with a gain of 70 points, or 0.44 percent, at 15,924.20.

Nifty has closed at its all time high on July 15 after making a fresh intra day high at 15952. However, the advance decline ratio has turned negative after 4 sessions of positive numbers. Focus is now shifting towards the largecaps, after being neglected for quite some time. This is apparent from the higher volumes and successive rise in the Nifty. The momentum in the market remains up. On upmoves the Nifty could face resistance at 15987, while 15855 could be a support for the next session.

Daily Technical View on Nifty

Lack of strength in upside momentum..

Observation: The upside momentum with range bound action continued in the market for the third consecutive session on Thursday and Nifty closed the day higher by 70 points. After opening on a positive note, the market continued its range bound action with positive bias in the better part of the session. New all time high was formed at 15952 in the afternoon and Nifty later shifted into an intraday consolidation towards the end. A reasonable positive candle was formed on Thursday and the market placed near the all time high towards the close. This pattern indicate an attempt of upside breakout of the larger month old consolidation pattern at 15915 levels.

But, the lack of strength at the highs could dampen the effort of bulls to sustain above the hurdle. Further consolidation at the highs could bring bears into action to witness next round of downward correction from the highs, as happened in past. Nifty on the intraday chart like 60 mins is showing sideways range movement in the last four trading hours of Thursday. Such patterns of recent past have eventually resulted in an upside breakout of the intraday range movement. The immediate intraday support of 10 period EMA is going to be crucial at 15900 levels. Any movement below this area for few hours on Friday could drag index into a reasonable downward correction.

Conclusion: The short term trend of Nifty continues to be positive with range bound action. The lack of strength in the upside momentum at the hurdle and poor market breadth of Thursday could raise doubt on a decisive upside breakout of larger consolidation band at 15920-15950 levels. Emergence of strong upside momentum above 15950 is expected to open next higher levels of 16100 in the short term.

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