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

The Dow Jones Industrial Average booked a modest loss Monday, after briefly surpassing its all-time closing high, while the Nasdaq Composite and small-cap Russell 2000 index finished higher as investors awaited more data on the next leg of the economic recovery. Stock indexes ended mixed, with the tech-heavy Nasdaq Composite and small-cap Russell 2000 booking gains, as investors looked forward to the release of May inflation data on Thursday to help gauge pricing pressures building up during the most recent leg of the U.S. economic recovery.

Japan’s economy shrank at a slower pace than initially estimated in the first quarter of 2021, confirming the first contraction in three quarters. It shrank 3.9% on an annualized basis, compared with the 5.1% contraction in a preliminary estimate released in May. The economy shrank 1.0% from the previous quarter.

Deutsche Bank economists issued a dire warning that focusing on stimulus while dismissing inflation fears will prove to be a mistake if not in the near term then in 2023 and beyond.

The Indian government will extend free foodgrain transfers under its Pradhan Mantri Garib Kalyan Anna Yojana until Diwali, Prime Minister Narendra Modi said on Monday. Till November, free food grains will be available in fixed quantity every month to more than 80 crore Indians. According to a person familiar with the matter, the cost of these food transfers for the AprilNovember period is estimated at Rs 1.3 lakh crore. The increased spend on food transfers comes alongside wider provision for vaccination by the centre. There is now a high likelihood that the Government of India’s fiscal deficit will exceed the budgeted Rs. 15.1 lakh crore.

Asian stocks were steady early Tuesday as investors await more clues on the outlook for inflation and central bank stimulus amid the recovery from the pandemic.

Indian benchmark equity indices ended higher at another record high on June 7 after a range bound session. News about the gradual reopening of the economy following the fall in Covid cases boosted sentiments. At close, the Nifty was up 81.40 points or 0.52% at 15751.70.

Nifty has once again closed at an all time closing high accompanied by sharply positive advance decline ratio. High volumes on a positive day is good news. Continued flow of positive news on Covid front could help sustain this upward momentum. 15630-15840 is the new band for the Nifty for the near term.

Daily Technical View on Nifty

Upmove with range bound action..

Observation: After showing range bound movement on Friday, Nifty shifted into a gradual upmove with choppy trade on Monday and closed the day higher by 81 points.

After opening on an upside gap of 55 points, Nifty showed intraday consolidation after the opening and filled the opening upside gap. A gradual upmove has witnessed later in the mid to later part and the market finally closed near the highs.

A small positive candle was formed with lower shadow, which indicate range bound action in the market with buy on dips opportunity. We observe three back to back such candles over last three sessions and this indicate a breather type formation in the market.

Nifty registered a new all time high on Monday at 15773 and still there is no indication of any profit booking emerging from the new highs.

The overall market breadth continued to be positive and performance was seen in the broad market indices like midcap and small cap segments. This could mean a display of inherent strength and lack of selling enthusiasm at the new highs.

Daily RSI is placed at 70 and is on a flat mode and there is no indication of any negative divergence developing at the highs. Hence, any turn up of daily RSI from here could mean further upside in the underlying Nifty.

Conclusion: The short term trend of Nifty continues to be positive with range bound movement.

There is a possibility of further upside in the coming sessions. The next upside levels to be watched around 15950-16000 levels and this could be achieved in the one week. Immediate support is placed at 15650

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