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

The Dow Jones Industrial Average and S&P 500 index finished lower Wednesday, while the Nasdaq ended flat, as investors absorbed a huge batch of earnings from technology heavyweights.

So far roughly 38% of the S&P 500 has reported earnings. Of the names that have posted quarterly updates, 83% have topped earnings expectations, while 79% have exceeded revenue estimates.

Sino-U.S. tensions were in focus after the Federal Communications Commission gave China Telecom 60 days to leave the U.S. market. Regulators cited a potential national security threat from the company, such as the disruption of U.S. communications, amid rising tensions between the countries.

Brazil’s central bank on Wednesday raised interest rates by 150 basis points to 7.75%, stepping up its battle against a deteriorating inflation outlook after the government moved to loosen its constitutional spending limit.

Meanwhile, in a surprise move Wednesday, the Bank of Canada said it would abruptly end its bond buying program and warned of prolonged inflation through 2023, while also signaling it may hike interest rates sooner than expected, the second quarter of 2022.

Most Asian stocks fell Thursday amid concerns that the recovery from the pandemic will slow as elevated inflation forces tighter monetary policy. The Bank of Japan is also set to announce its latest monetary policy decision on Thursday. The central bank is expected to hold steady on policy, according to Reuters.

Nifty fell on October 27 after gaining on the previous day. At close Nifty was down 0.31% or 57.45 points at 18210.95. Nifty lost some steam on October 27 after gaining it on the previous day. However 18155 is the crucial support and till it is breached, Nifty has a chance to continue the uptrend. Advance decline ratio ended in the positive but fell from the morning levels, suggesting profit taking in broader markets.

Daily Technical View on Nifty

Weak upside bounce..

Observation: After showing sustainable upside bounce from the lows on Tuesday, Nifty displayed high volatility on Wednesday and closed the day lower by 54 points. After opening on a positive note, the market made an attempt to move up gradually in the early-mid part of the session before shifting into a narrow intraday range. The sharp weakness triggered in the afternoon to later part of the session and the market finally closed near the lows.

A reasonable negative candle was formed on the daily chart, that has engulfed the previous bull candle of Tuesday. Technically, this pattern signal an inability of bulls to sustain the highs. This weak upside bounce indicate bear's dominance in the market. The support of 10day EMA has been revisited at 18165 levels and the Nifty is now placed at the edge moving below the said support. Further weakness from here could find another lower support of 20day EMA, which is currently placed at 18027 levels. The broad market indices like midcap and small cap segments of NSE have displayed resilience during volatile bench mark index on Wednesday and closed on a minor gains. This could be a minor positive indication.

Conclusion: The short term trend of Nifty remains choppy and the attempt of upside bounce from the support is weak. A sustainable move only above 18300-18350 is likely to open further upside for the market ahead. Further weakness from here could find next lower support at 18K levels.

Nifty – Daily Timeframe chart

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