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Indian markets could open flat to mildly higher, in line with largely rangebound Asian markets today and despite positive US markets on Thursday -  HDFC Securities

The S&P 500 index and the Nasdaq Composite ended at records Thursday as shares sensitive to economic recovery and technology stocks both rose while investors positioned for the monthly jobs report on Friday that will help shape views on how long the Federal Reserve’s bond-buying program will continue. Stocks maintained a positive tone Thursday after data showed first-time claims for unemployment benefits last week fell to 385,000, down 14,000 from the previous week and in line with forecasts, while continuing claims fell below 3 million for the first time since March 2020.

Asian shares failed to catch a firm lead from a bumper Wall Street session on Friday as the spread of the Delta variant of the coronavirus across the region heightened worries about its economic recovery. Shares fell in Hong Kong and China, where Beijing’s regulatory crackdown and a warning about a possible downward spiral at China Evergrande Group -- the world’s most indebted developer -- subdued sentiment.

Indian benchmark indices closed mildly higher on Aug 05 for the third consecutive day amidst mixed global cues and profit taking in broader markets. At close the Nifty was up 0.22% or 35.8 points to close at 16294.6.

Nifty made a classic doji after a rise on Aug 05, suggesting indecision at higher levels. Either one or two upgaps made in the course of the journey from 15885 may come in for filling over the next few sessions. Advance decline ratio was very bad in the morning session, but improved a bit towards the end to look better than the previous day, though very much in the negative. 16176-16349 could be the trading band for the Nifty in the next 1-2 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. It was the fourth consecutive session of gains for the Nifty. The Nifty finally gained 35.8 points or 0.22% to close at 16,294.6. Broad market indices like the BSE Small Cap index 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 on a shaky note and after a weak morning session proceeded to move higher. Selling pressure however emerged from the highs in the afternoon session and wiped out some of the gains seen in the first half of the trading session. The short term trend nevertheless 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 or consolidations

The index could correct towards the 16210 supports in the very near term. 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 16130.

Conclusion: The 1-2 day trend of the Nifty is now down with the Nifty breaking its nearby supports and with the intraday momentum indicators easing. Nifty could test the 16210 levels in the very near term.

On the larger daily timeframe, 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 16130.

Nifty – Daily Timeframe chart

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