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Indian markets could open flat to mildly higher, in line with Asian markets that are mixed today and despite negative US markets on Monday..…- HDFC Securities

US stocks closed lower on Monday as Wall Street investors found few reasons to drive equity benchmarks further into record territory after markets ended last week at all-time highs. The tone however remained constructive given a lack of any major negative catalysts. Bond investors are also waiting to gauge the market's appetite for $24 billion of 20-year bonds scheduled to be auctioned on Wednesday

Sentiment indicators suggest the market may be at risk for a pullback. The AAII Sentiment Survey shows 57% of respondents are bullish, the highest level in over three years. Fund flows reinforce this trend, with greater equity flows in the past five months tan in the prior 12 years combined.

An index of stocks across the world on Monday posted its largest daily drop in almost four weeks after touching a record high as investors looked for earnings to justify the high valuations in equities. MSCI's gauge of stocks across the globe shed 0.28%, its largest daily drop since March 24.

China kept its benchmark lending rate for corporate and household loans steady for the 12th straight month at its April fixing on Tuesday, matching market expectations. The one-year loan prime rate (LPR) was kept at 3.85%. The five-year LPR remained at 4.65%.

Asia stocks were mixed on Tuesday after weakness in the technology sector pulled U.S. indexes from all-time peaks, with investors weighing corporate earnings and recent spikes in virus cases.

Indian benchmark equity indices ended lower on April 19 amid fears of impact of the second wave of Covid-19 and the consequent lockdowns on the economy. At close, the NSE Nifty 50 Index also dropped 1.77% or 258 points to end at 14359. This made India the worst performing market in Asia. The Indian rupee fell by the most in almost two weeks by about 0.5% to 74.89.

Nifty has formed a second down gap in 5 days signifying the underlying weakness. However the close today was near the intra day high thereby making a hammer type of formation. This could mean some more upside recovery in the near term. However at higher levels, markets will keep seeing repeated selling given the impact of Covid second wave on businesses and the economy

Daily Technical View on Nifty

Observation:

After showing upmove in the last three sessions, Nifty witnessed a sharp weakness again on Monday and closed the day lower by 258 points. Nifty opened on a downside gap of 311 points, Nifty slipped into further weakness in the early part of the session. A sustainable upside recovery has emerged from the days low of 14191 and finally closed the day by erasing most of the intraday loss.

A small body of positive candle was formed with long lower shadow. Technically, this pattern could mean a bullish hammer type formation (not a classical one). Having formed this upside recovery at the important lower support of 14200 levels could mean a possibility of upside bounce.

Negative chart pattern like lower highs and lower lows continued in the market as per daily timeframe chart and Nifty has formed a new lower low of 14191 on Monday. According to this chart pattern, one may expect small upside bounce and the opening downside gap of 14550 could offer strong resistance at the highs

Nifty on the weekly chart, placed at the key lower support of 20w EMA around 14200 levels. Another key moving average of 10w EMA is now at the resistance around 14600 levels. The negative chart pattern like lower highs and lows continued on the weekly chart and Nifty is now placed near the lower lows.

Conclusion: The short term trend of Nifty seems to have reversed on Monday, after a reasonable upmove of the last three sessions. But, fine upside recovery raise some hopes for bulls to make a comeback for the short term.

Having placed at the crucial lower supports of 14200 and the chart pattern of daily/weekly timeframe, one may expect minor upside bounce in the next few sessions (up to the gap hurdle of 14550) There is a expectation of next round of weakness from the highs.

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