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Indian markets could open flat to mildly higher, in line with largely positive Asian markets today and higher Nasdaq on Monday - HDFC Securities

The S&P 500 and Nasdaq Composite finished at record highs on Monday, as investors looked ahead to one of the busiest weeks of earnings season and awaited a Wednesday update on the economic recovery from the Federal Reserve. Through Friday, a quarter of S&P 500 companies had reported first-quarter results, leaving the index with the highest year-over-year growth in earnings since the third quarter of 2010.

US March durable-goods orders rose 0.5% last month, falling short of forecasts for a 2.2% increase from February. The data reflected a sharp decline in commercial and military aircraft sales but also pointed to the impact of shortages of supplies and raw materials that have gummed up supply chains.

Asian stocks were mixed in early trading Tuesday as traders await a Federal Reserve meeting that is expected to leave policy exceptionally loose despite robust growth.

Indian equity benchmark indices climbed on April 26 in line with other global peers. At close the Nifty ended 1% or 144 points higher (its biggest advance in almost two weeks) at 14485.

Nifty crossed 14526 but closed below it. Falling volumes on an up-day denotes caution while a healthy advance decline ratio and relatively better performance of broader indices means that the traders/investors are focused more on the broader markets than the largecaps, where there is a risk of selloff by institutions. In the near term, 14339-14405 band could offer support to the Nifty while a breach of 14526 could take the Nifty up to 14698.

Daily Technical View on Nifty

Observation:

After showing volatility on Friday, Nifty witnessed sustainable upmove on Monday and closed the day higher by 143 points. After opening on an upside gap of 108 points, Nifty made an attempt to move up in the early part of the session, It failed to sustain above 14550 levels and later shifted into a consolidation movement, which continued till the end of the session, The opening upside gap remains unfilled.

A small body of positive candle was formed with long upper shadow. Technically, this pattern indicates a formation another high wave type formation and this suggest that the market is preparing for another sell on rise action in coming sessions

In previous two occasions similar type of pattern were formed on third day (after a rise of two days) around the hurdle and the market has finally witnessed a sharp one day decline in the subsequent session.

Current pattern indicates a similar possibility in the market in the next 1-2 sessions. Nifty has faced stiff resistance at previous opening downside gap of 14550 levels (19 April) and showed intraday weakness from the highs on Monday

Conclusion: The short term trend of Nifty continues to be positive, but the lack of strength to sustain the highs/at the resistance has continued. This pattern opens another round of downward correction from here. The quantum of weakness is expected to decide the short term trend of the market. However, a decisive move below the immediate support of 14400 is likely to open door for the next lower support of 14200- 14150 levels in the short term. The sustainable up move could only resume above 14550 levels.

Nifty – Daily Timeframe chart

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