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Indian markets could open flat to mildly higher, in line with largely range bound Asian markets today and despite a lower Dow Jones index in higher US markets on Wednesday..… -  HDFC Securities

U.S. stocks ended mostly lower Wednesday, after Federal Reserve Vice Chairman Richard Clarida said the economic recovery during the pandemic could prove robust enough to pave the way for higher interest rates in 2023.

In U.S. economic data on Wednesday though, fewer than expected private sector jobs were created in July, according to ADP, setting the stage for Friday’s monthly nonfarm-payrolls report from the U.S. Labor Department to disappoint as investors monitor COVID-19 cases and the spread of the delta variant. Last month saw 330,000 jobs added, missing consensus estimates of economists surveyed by Dow Jones for 653,000 and marking the smallest monthly gain since February.

The private-sector jobs update comes ahead of Friday’s jobsmarket report from the U.S. Labor Department where 845,000 jobs are anticipated and the unemployment rate is projected to fall to 5.7% from 5.9%.

A survey of service-oriented businesses pushed its index up to 64.1 in July from 60.1 in the prior month, hitting the highest level on record, with input costs rising at the fastest rate since 2005, the Institute for Supply Management said Wednesday.

Brazil’s central bank raised its key interest rate by a full percentage point on Wednesday for the first time since 2003, and pledged to step on the policy tightening accelerator even harder to ensure inflation is pulled back toward target next year. The unanimous decision to raise the benchmark Selic rate to 5.25% was in line with the predictions of 37 of the 46 economists in a Reuters poll, and followed three consecutive rate increases of 75 basis points.

Asian shares held on to recent gains in morning trading on Thursday, despite hawkish remarks from a senior official at the U.S. Federal Reserve, that boosted the dollar while weighing on risk appetite, and uncertainty about Chinese policy.

Carrying on from the momentum of the previous day, Nifty opened gap up on Aug 04 and continued to inch up in the morning session. It closed 0.79% or 128 points higher at 16259. The indices made another record intraday high and closing high. Nifty rose with another gap up on Aug 04 reflecting the pent up demand in index heavyweights. Advance decline ratio however has turned very negative despite Nifty being up, suggesting profit taking in the broader markets. With other markets doing well, Nifty could continue to remain steady/up, while the broader market correction could continue for a few sessions.

Daily Technical View on Nifty

Observation: Carrying on from the previous session, markets moved up further on Thursday to close at new life highs. The Nifty finally gained 128.05 points or 0.79% to close at 16,258.8.

Broad market indices like the BSE Mid Cap and Small Cap indices ended lower, thereby under performing the Sensex/Nifty. Market breadth was negative on the BSE/NSE.

Zooming into the 60 minute chart, we can see that the Nifty opened with an up gap and then gradually rose through the day with minor intraday corrections.

The short term trend therefore remains up with the Nifty surging higher after breaking out of a downward sloping trend line on the 60 minute chart on Monday. The Nifty also trades above the 20 period MA and 50 period MA on the 60 min chart. The short term intraday momentum indicators are however easing from overbought levels, which suggests that there could be minor corrections.

Further upsides are likely once the immediate resistance of 16291 is taken out. Crucial supports are now at 16204.

On the daily chart, the Nifty continues to hold above a rising trend line that has held the important lows of the last few months. This implies that the index remains in an intermediate uptrend. The index also continues to trade above the 20 and 50 day SMA, which gives further evidence of an uptrend.

And on Tuesday, the Nifty has broken out of the 15451-15962 trading range, which is an encouraging signal for the uptrend to continue. Upside target implications are at 16500.

Crucial supports to watch for a short term trend reversal are at 16050.

Conclusion: The 1-2 day trend of the Nifty remains up with the Nifty surging higher after breaking out of a downward sloping trend line on the 60 minute chart on Monday. The Nifty also trades above the 20 period MA and 50 period MA on the 60 min chart. Traders can buy on any minor dips.

On the larger daily timeframe, the Nifty has broken out of the 15451-15962 trading range and also trades above the 20 and 50 day SMA, which gives further evidence of the uptrend to continue. Short term trend reversal levels are at 16050.

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