IGI Logo

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

U.S. stocks closed lower Tuesday, after a five day rally to record highs for the main indexes, ahead of quarterly results from some of the most prominent names in the technology sector and as a Chinese regulatory crackdown dampened the investing mood on Wall Street. US stocks slumped, led by technology stocks, as investors worried about a selloff in Hong Kong’s Hang Seng Index, which has put pressure on risk assets around the globe.

The developments in Asia come as investors are also waiting for economic reports this week, including second quarter GDP, and a policy update from the Federal Reserve on Wednesday.

The Conference Board’s closely followed index of US consumer confidence edged up to 129.1 this month from a revised 128.9 in June, hitting a 16-month high.

The International Monetary Fund, on July 27, cut India's gross domestic product (GDP) growth forecast to 9.5 percent for fiscal year 2021-22, from the previous forecast of 12.5 percent, citing the hit on economic activity and demand due to the deadly 'second wave' of the COVID-19 pandemic. For fiscal year 2022-23, however, IMF expects economic growth of 8.5 per cent, larger than the 6.9 per cent it had projected in April.

Shares in Asia-Pacific were lower in Wednesday morning trade at 7 month lows, as a rout in China spurs caution and U.S. megacap technology earnings receive a mixed response. Traders were reluctant to place large bets ahead of the outcome of the US Federal Reserve meeting.

Indian benchmark equity indices once again failed to hold on to gains on July 27 as Asian markets came under pressure after China continued to crackdown on its internet businesses. Q1FY22 numbers from Indian corporates failed to excite investors. At close Nifty was down 0.49% to 15746.5. Smallcap indices ended better than the Nifty.

Nifty has formed a bearish Engulfing Top like pattern. It has repeatedly failed to cross the 15962 level. With the US Fed meet and F&O expiry over the next two days, we could see heightened volatility in the markets. 15632-15824 could be the band for the Nifty over the next 1-2 sessions.

Daily Technical View on Nifty

Continuation of choppy movement..

Observation: After showing weakness with range bound action in the last couple of sessions, Nifty seems to have strengthened its weakness on Tuesday and closed the day lower by 78 points.

After opening on a positive note, Nifty made an attempt to move up in the early part of the session. It failed to surpass intraday hurdle of 15880-15900 and started to show sharp intraday weakness from the highs. Minor upside recovery has emerged from the lower support of 15700 levels towards the end.

Long negative candle was formed on the daily chart with minor lower shadow. This signal continuation of weakness in the market with range bound action. The opening downside gap of 17th July has been acting as a stiff resistance in the last three sessions.

In the last one month, Nifty showed maximum 3-4 sessions of decline during its broader range movement and the decline down to the lower area of 15600 has proved to be a good support for the market and resulted in an upside bounce. Having declined from the highs in the last three sessions, the odds of a decent upside bounce can be expected in the next 1-2 sessions.

On the weekly chart the 10w EMA has been offering support for the market in the last couple of weeks and the average is now placed at 15635 levels. Hence, further weakness could be a buy on dips opportunity for the market ahead.

Conclusion: The weakness with choppy trend continued in the Nifty and still there is no respite for bulls at the lows. The chart pattern of daily and weekly signal a possibility of an upside bounce in the market from the lows of around 15650-15680 levels in the next 1-2 sessions. On the higher side 15900 remains overhead hurdle for the near term.

To Read Complete Report & Disclaimer Click Here

Please refer disclaimer at https://www.hdfcsec.com/article/disclaimer-1795

SEBI Registration number is INZ000171337

Views express by all participants are for information & academic purpose only. Kindly read disclaimer before referring below views. Click Here For Disclaimer