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

The Dow and S&P 500 index closed at records on Thursday as economic reports affirmed a healthy economic recovery from the coronavirus pandemic, highlighted by retail sales surging in March after fiscal stimulus checks were paid to Americans while jobless benefit claims fell to a fresh low for the pandemic period. The US came out with encouraging data on Thursday. US retail sales climbed 9.8% last month. Economists polled by Dow Jones and The Wall Street Journal had forecast a 6.1% increase.

U.S. unemployment claims sank by 193,000 in the week of April 10, an unusually large decline that likely reflects both an improving economy but also continuing problems in processing applications for jobless benefits. U.S. industrial production also rose 1.4% in March, after a revised 2.6% fall in the prior month that was caused by severe winter weather. The 10-year Treasury note fell to 1.53% on Thursday. The Philadelphia Federal Reserve manufacturing index jumped to a reading of 50.2 in April from a revised 44.5 in the prior month, marking the highest level in almost 50 years. Economists had expected a reading of 42.

The New York Federal Reserve’s Empire State Index rose to a reading of 26.3 in April from 17.4 in March, the New York Fed said—its highest reading since October 2017. China’s industrial output grew 14.1% in March year-on-year, slowing from a 35.1% surge in the January-February period, while retail sales rose at a solid pace. Retail sales increased 34.2% yearon-year in March, beating a 28.0% gain expected by analysts and stronger than the 33.8% jump seen in the first two months of the year.

Fixed asset investment surged 25.6% in the first three months from the same period a year earlier, versus a forecast 25.3% increase, and slowing from January-February’s 35% rise. Real estate investment in China rose 25.6% in the first three months of the year from a year earlier, cooling from a 38.3% gain seen in the first two months.

China’s economic recovery quickened sharply in the first quarter from a coronavirus-induced slump earlier last year, propelled by stronger demand at home and abroad and continued government support for smaller firms.

Gross domestic product (GDP) jumped a record 18.3% in the first quarter from a year earlier, fastest since atleast 1992, but slower than the 19% forecast by economists in a Reuters poll, and following 6.5% growth in the fourth quarter last year. India’s trade deficit widened in March amid rising imports, including higher inbound shipments of gold.

Trade deficit for March stood at $13.93 billion compared to a deficit of $12.61 billion in February. Shares in Asia-Pacific were largely flat to mildly higher in Friday morning trade as investors reacted to the release of Chinese economic data

Daily Technical View on Nifty

Observation: After showing a sustainable upside bounce on Tuesday, Nifty witnessed another decent upmove amidst a volatility on Thursday and closed the day higher by 76 points.

Nifty opened on a positive note, made an attempt to move up in the early part of the session. Intraday weakness got triggered from the high of 14566. A fine upside recovery has emerged from the lows and the market moved up in the afternoon to later part of the session and closed near the highs. A small positive candle was formed with long lower shadow.

Technically, this pattern indicate a buy on dips opportunity in the market and this is positive indication. Having sustained near the lower range/key support around 14300-14250 levels for the last two sessions, the odds of further upside bounce near to the upper range of 14800-14900 likely in the next few sessions. The opening upside gap of 12th April could offer strong resistance for the market around 14800 levels

Nifty on the weekly chart has recovered from the weekly 20 period EMA at 14220 levels. Another crucial 10 period EMA is placed at the highs of 14650 levels. Weekly chart is showing consistent lower highs (15431, 15336 and 14984) with horizontal support of 14250 levels over the last two months. There is a higher possibility of Nifty forming another lower top around 14800-14850 levels this time, before showing weakness from the highs.

Conclusion: The short term trend of Nifty continues to be positive with volatility. There is a possibility of further upside in the next few sessions towards 14800 levels before showing decline again from the highs. The overall long term chart pattern indicate that this is going to be a last rise before the sharp weakness from the highs. Immediate support is at 14520.

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