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

U.S. stocks mostly booked modest gains Wednesday, after Amazon and Google reported healthy results in the secondbusiest week of the quarter for earnings reports. Energy stocks led gains as U.S. oil prices closed at a 12-month high of $55.69 a barrel, while shares of financials also edged up with bond yields.

Oil futures rose on hopes for more stimulus spending, with the U.S. benchmark closing up 1.7% to settle at a 1-year high of $55.69 a barrel. St. Louis Federal Reserve President James Bullard thinks U.S. economic growth could top 6% this year and grow faster than China in 2021.

In economic data, a reading of private-sector employment from ADP showed 174,000 jobs were created in January, blowing past the Econoday consensus of 50,000 jobs and improving on the 123,000 December decline. Institute for Supply Management Services showed a reading of 58.7 in January on Wednesday, stronger than expected and near a two year high.

The S&P 500 earnings recession is now set to end, as bottom-line results for the fourth quarter have swung to growth for the first time in a year (+0.2%in Q4 vs -5.6% in Q3, -31.2% in Q2 and - 13.9% in Q1) as more companies are beating expectations, by bigger margins, than usual.

Asian stocks came under pressure on Thursday as a mixed Wall Street session gave investors few immediate reasons to increase their risk positions.

Indian equity benchmark indices ended higher for the third straight day on Feb 03 (in its best rally in 10 months) but ran into resistance at higher levels. At close, the NSE Nifty 50 index ended 1% higher at 14,789.

Nifty managed to register a new all time high, though it retreated from the highs towards the end. This raises the possibility of a bullish technical count, especially if it does not correct sharply today. The band for Nifty in the near term is 14868 – 14653.

Daily Technical View on Nifty

Observation: Markets ended with healthy gains on Wednesday as the rally continued post Budget. The Nifty finally gained 142.1 points or 0.97% to close at 14,789.95. Broad market indices like the BSE Mid Cap and Small Cap indices gained more, thereby out performing the Sensex/Nifty.

Market breadth was positive on the BSE/NSE. Sectorally, the top gainers were the BSE Healthcare, Power, Metal and Telecom indices. The top losers were the BSE Realty and FMCG indices. Zooming into the Nifty 15 min charts, we observe that the Nifty opened with an up gap and moved higher before correcting and closing below the 20 period MA.

The index nevertheless continues to trade above the 50 period MA and we expect this MA to provide support to the index as it continues to move higher towards the 14900 levels in the very near term. On the daily chart, we can observe that the Nifty has convincingly reversed the recent downtrend by moving up from a trend line support and convincingly closing above the 50 day SMA on Monday. With yesterday’s further up move, the Nifty now comfortably trades above the 20 day SMA.

The index could now attempt to make new life highs in the coming sessions. It is important that the Nifty does not move below the immediate support of 14574 on any corrections for the short term uptrend to remain intact. We recommend using a selective buying approach and accumulating quality stocks from outperforming sectors. Strict stop losses need to be kept to control risk.

Conclusion: The 1-2 day trend of the Nifty remains up with the index surging higher and the index trading above the 50 period MA on the 15 min charts. Nifty is likely to test the 14900 levels in the very near term. Our 7-day view on the market too remains bullish as the Nifty has convincingly reversed the recent downtrend by moving up from a trend line support and convincingly closing above the 20 day and 50 day SMA. Our bullish bets for the next 7 sessions would be off if the Nifty moves lower and closes below the 14574 levels.

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