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

The Dow industrials closed modestly higher Monday, booking a fourth straight day of gains, as energy and bank shares rose with rallying Treasury yields. But the move in rates also caused headwinds for rate-sensitive areas of the market, including technology. The yield on the 10-year Treasury note rose 2.3 basis points to around 1.482% Monday (after briefly breaching 1.5%) from 1.459% on Friday.

Rising yields can increase the discount rate for techrelated stocks and highly valued sectors, while helping to boost shares of financials whose business models benefit from higher longer-end rates. T h e U . S . o i l benchmark settled at $75.45 a barrel on Monday, near a 3- year high. Goldman Sachs Group Inc. said Brent could hit $90 by year-end as the market is in a bigger deficit than many realize.

US Orders for durable goods surged 1.8% in August, largely thanks to more demand for Boeing jetliners, but continued supply shortages held back auto makers and remained a drag on the U.S. economic recovery. Economists surveyed by The Wall Street Journal had forecast a 0.6% rise.

Global shoppers face possible shortages of smartphones and other goods ahead of Christmas after power cuts to meet official energy use targets forced Chinese factories to shut down and left some households in the dark. As per Nomura, Beijing’s unprecedented resolve in enforcing energy consumption limits could result in long-term benefits, but the short-term economic costs are substantial. They said the impact might be so severe that they cut their economic growth forecast for China to 4.7% from 5.1% over a year earlier in the current quarter. They cut their outlook for annual growth to 7.7% from 8.2%. Goldman Sachs on Tuesday slashed its China GDP growth expectations to 7.8%, down from the 8.2% previously forecast as energy shortages and deep industrial output cuts add significant downside pressures.

Profits at China’s industrial firms grew at a weaker pace in August from a year earlier, slowing for a sixth consecutive month, as manufacturers struggled with high commodity prices, COVID-19 outbreaks and shortages in some key components. Profits rose 10.1% on year to 680.3 billion yuan ($105 billion) last month compared with a 16.4% gain in July.

The Centre will borrow Rs 5.03 lakh crore in the second half (October-March) of 2021-22, and will stick to the Rs 12.05 lakh crore borrowing target for the year in spite of absorbing additional loans in lieu of goods and service tax compensation shortfall to states. During the first half, the government borrowed Rs 7.02 lakh crore through securities or G-Secs.

Asia stocks were mostly lower though mildly on Tuesday after a jump in Treasury yields as investors priced in the start of Federal Reserve tapering and elevated energy prices. Nifty ended flat on Sept 27 after going in and out of positive territory. At close, Nifty was up 1.9 points or 0.01% to 17855.

Nifty could not breach the highs of Friday on Sept 27 and ended almost flat. Advance decline ratio deteriorated during the day to end at below 1:1. Broader market is seeing lack of buying/participation while the largecaps are seeing rotational buying with Auto coming back in favour while IT going out. However large scale sell-off is not yet seen in the markets and hence hopes of Nifty touching 18000 level over the next few days still remains alive.

Daily Technical View on Nifty

Nifty : Sell Nifty Below 17792

* Nifty consolidated for the entire session and closed with the minor gain of 2 points at 17885

* Last 2 sessions high have been around 17845 levels, which could act as a intraday resistance

* Previous swing high on Nifty daily chart is placed at 17792, which could act as a support

* RSI on the daily chart has made a lower top, while Nifty has made a higher top on the daily chart. This has resulted in to negative divergence

* Sustainable level below 17792 could bring selling pressure in Nifty

* Indicators and oscillators are showing sign of weakness in the current upswing of Nifty

* 13 days EMA support for the Nifty is placed at 17558, which should be kept as positional stoploss in Nifty

* Advance Decline remained negative at 2:3 ratio

* Sectors which could do well in today’s trade are Energy, IT and FMCG

Nifty – Daily Timeframe chart

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