IGI Logo

Indian markets could open flat to mildly higher, following mixed Asian markets today and mixed US markets on Wednesday - HDFC Securities 

U.S. stocks closed mostly lower Wednesday, but the Dow Jones Industrial Average booked its third straight record close, after minutes from the Federal Reserve’s January meeting showed officials were skeptical about the economy improving enough to warrant removing monetary stimulus any time soon.

US retail sales surged 5.3% in January, blowing past a Dow Jones estimate of a 1.2% rise. The producer price index, a measure of the prices businesses receive for their goods and services, rose 1.3% in January, the biggest jump since the index began in December 2009. A separate report on industrial production from the Federal Reserve showed a rise of 0.9% in January, also trouncing economist forecasts of a 0.5% gain.

The US Fed Wednesday reaffirmed its concerns about the economy and its plans to stay on hold for the foreseeable future, in the minutes from its last meeting.

Shares of Verizon Communications Inc. rose 5.4%, and Chevron Corp. rallied 3% to pace the Dow after Warren Buffett’s Berkshire Hathaway Inc. disclosed that it acquired large stakes in the companies during the fourth quarter.

Stocks in Asia-Pacific were mixed in Thursday trade, as investors watched movements in mainland Chinese stocks as they returned from the Lunar New Year holiday.

Indian benchmark equity indices ended in the negative for the second consecutive session on February 17 despite a rally in PSU bank stocks. Nifty fell after making an intra day high at 1240 Hrs. At close, the Nifty was down 104.60 points or 0.68% at 15,208.90.

Nifty formed lower top lower bottom formation on Feb 17 after the recent rise, raising concerns about the rally getting tired. However an equal advance decline ratio on a negative day means that some bottom fishing has happened in stocks that have corrected over the last few days. 15112-15170 could be the next support band for Nifty. On rise 15340 could act as a resistance.

Observation:

Markets ended lower on Wednesday after a gap down opening. Though there was a sharp pullback rally, the index failed to cross its previous swing high and gradually slid lower. The Nifty finally lost 104.55 points or 0.68% to close at 15,208.9.

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

Zooming into the Nifty 15 min charts, we observe that the Nifty opened with a down gap thereby indicating that the bears were having an upper hand. Also the pullback rally in the morning session failed to cross the previous intra day swing high of 15332 and the Nifty gradually slid lower for the rest of the session

With the index closing below the 20 and 50 period moving average on the 15 min intra chart, the odds seem higher of the market drifting down further towards the trend line support at 15120 on the intra chart in the very near term.

On the daily chart, we can observe that the Nifty remains in a comfortable uptrend and well above its 20 day and 50 day SMA. Short term momentum indicators like the 14-day RSI have however corrected which indicates a weakening of momentum.

While we remain open to corrections in the near term, we expect the index to make new life highs in the coming sessions.

It is important that the Nifty does not move below the support of 14977 on any corrections for the short term uptrend to remain intact.

Conclusion:

The 1-2 day trend of the Nifty remains down with the Nifty closing below the 20 and 50 period MA on the intra chart. Nifty is likely to test the 15120 levels in the very near term. Our 7-day view on the market continues to remain bullish as the Nifty remains in a strong uptrend on the daily chart. Our bullish bets for the next 7 sessions would be off if the Nifty moves lower and closes below the 14977 levels.

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