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Indian markets could open flat to mildly higher, in line with mixed Asian markets today and mixed US markets on Wednesday- HDFC Securities

U.S. stock indexes closed mostly higher, near record territory Wednesday, after Federal Reserve Chairman Jerome Powell kicked off two days of testimony in which a sharp rise in inflation has been a key focus. The Fed chief said the labor market, although improving, has a long way to go toward recovering from the pandemic, despite recent record high job openings.

The central bank’s latest Beige Book survey on the economy was released during Powell’s testimony Wednesday, showing the U.S. is growing faster, helped along by consumer spending, but with the recovery restrained by widespread labor and supply shortages. Another concern has been climbing COVID cases in the U.S. and across the globe, driven by the highly transmittable delta variant and fueling concerns about unvaccinated adults infecting children.

Inflation worries were back in focus Wednesday after the June producer-price index came in hotter than expected, confirming that inflation is on the rise as the economy attempts to bounce back from the COVID pandemic. The PPI jumped 1% last month compared with analysts forecasts for a 0.6% rise. The pace of wholesale inflation over the past 12 months moved up to 7.3% from 6.6% in May - the largest annual gain in more than 10-1/2 years. The yield on the 10-year Treasury note fell 5.9 basis points to 1.356%.Oil futures end sharply lower, with the U.S. benchmark off 2.8% at $73.13 a barrel. Gold futures advanced 0.8% to settle at $1,825 an ounce.

Infosys reported a consolidated net profit of Rs 5,195 crore for the quarter ended June 2021, thereby growing 2.3 percent sequentially. However, the company increased its full-year revenue growth forecast in constant currency terms to 14-16 percent from 12-14 percent earlier. Consolidated revenue in rupee terms rose 6 percent quarter-on-quarter (QoQ) to Rs 27,896 crore for the quarter under review and the topline in dollar terms grew by 4.7 percent sequentially to $3,782 million.

Shares in Asia-Pacific were mixed in Thursday morning trade. China reported second-quarter GDP growth that came in slightly below expectations, while retail sales and industrial production grew faster than forecast. The country’s gross domestic product increased 7.9% in the second quarter from a year ago, the National Bureau of Statistics said Thursday. That fell short of Reuters’ estimate of 8.1% growth for the April to June period.

China Retail sales rose 12.1% in June from a year ago, more than the expected 11% level forecast by Reuters. Industrial production grew by 8.3%, greater than the 7.8% Reuters estimate. Indian equity benchmark indices ended higher for the second consecutive session on July 14 aided by a rally in IT stocks. At close the NSE Nifty 50 Index advanced 0.26% to 15,853.95. Nifty outperformed its Asian peers on July 14, even as the advance decline ratio turned back to even. This suggests a tendency to keep taking profits by traders/investors across the board. Nifty is once again near its earlier top of 15915. On falls 15745 could act as a support.

Daily Technical View on Nifty

Lack of strength near the key resistance..

Observation: The upmove with range bound action continued in the market on Wednesday and Nifty closed the day higher by 41 points. After opening on a weak note, the Nifty slipped into weakness in the early part of the session. A sustainable upside recovery has emerged from the day's low of 15764 in the early mid part and the market showed intraday range movement in the afternoon to later part of the session. A reasonable long candle was formed on the daily chart with minor lower shadow. This action signal range bound action in the market with buy on dips opportunity.

The Nifty is nearing a crucial overhead resistance of 15900 levels and made a swing high of 15877 on Wednesday. As happened in the previous few occasions, the lack of strength at the highs is emerging in the market near the crucial overhead resistance. Hence, though market moves up in the next 1-2 sessions, the sharp upside breakout of 15915 is not expected and there is a higher possibility of resumption of next round of downward correction from the higher levels.

Though Nifty moved up on Wednesday, the overall market breadth was not impressing. We observe minor gains in the broad market indices like mid and small cap segments. Hence, this pattern of market breadth is not a good sign at crucial overhead resistance.

Conclusion: The short term trend of Nifty continues to be positive. But, the lack of strength in the upside momentum is ruling out any decisive upside breakout of 15900 levels. There is a possibility of minor weakness emerging from the highs again in the next 1-2 sessions. Immediate support is placed at 15750.

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