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

The S&P 500 and the Nasdaq Composite booked fresh closing records on Monday, as stock-market investors piled into technology and consumer discretionary shares, but the Dow Jones Industrials finished lower. The S&P 500 has risen 3% so far in August - a seasonally weak period for stocks - and Wells Fargo analysts said last week they expect the index to rise another 8% by the end of the year. Energy prices ended higher as officials begin to tally up damage from Hurricane Ida on the Gulf Coast.

India’s economy is expected to have grown at a record pace in the three months that ended in June — but analysts point out that the data is unlikely to paint a full picture of the country’s growth trajectory. More than 40 economists polled by Reuters this month predicted that gross domestic product rose 20% on-year for the April to June period.

Data To Watch 4pm: India fiscal deficit in rupees for April-July period 5pm: India Eight Infrastructure Industries Index for July, Prior 8.9% 5:30pm: India GDP for quarter ended June; est. 20.0% (prior 1.6%) 5:30pm: India GVA for quarter ended June; est. 19.6% (prior 3.7%).

Most Asian stocks dipped Tuesday as traders assessed weaker economic activity in China and the latest escalation in Beijing’s crackdown on private industries. Stepped up curbs on Chinese video-gaming firms also hampered sentiment by putting the spotlight back on the clampdown on technology companies. Separately, China’s securities regulator said it plans to rein in the country’s private equity and venture capital funds.

China’s factory activity grew at a slower pace in August as compared with the previous month, data released Tuesday showed. The official manufacturing Purchasing Managers’ Index for August came in at 50.1, against July’s reading of 50.4. In a worrying sign for China’s slow consumption recovery, a gauge of activity for the services sector in August slipped into sharp contraction for the first time since the height of the pandemic in February last year. The official non-manufacturing PMI in August was 47.5, well down from July’s 53.3

Nifty closed at another record high on Aug 30 boosted by encouraging global cues. At close, Nifty was up 1.35% or 226 points to 16931. India was the second best performing market in Asia after Jakarta.

Nifty closed once again at the all time high. It is now near the 17000 psychological mark. Sharply positive advance decline ratio has improved sentiments, though participants are aware of the high valuation and possibility of a correction that can set in soon. 17,000 is the next logical target for the Nifty while 16731 is the support for the near term.

Daily Technical View on Nifty

Observation: Markets surged higher on Monday. The Nifty finally gained 225.8 points or 1.35% to close at 16,931.05. Broad market indices like the BSE Mid Cap and Small Cap indices gained more, thereby out performing the Sensex/Nifty. Market breadth was positive on the BSE/ NSE.

Zooming into the 15 minute chart, we can see that the Nifty opened with an upgap and gradually rose through the day to close at yet another new life high. With the 20 period MA now providing support to the index, we expect it to move higher to new life highs in the very near term. Crucial supports to watch for weakness are at 16847. 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 recently, Nifty has broken out of the 15451-15962 trading range, which is an encouraging signal for the uptrend to continue. However, we remain open to the possibility of the Nifty correcting towards the 16565 support levels in the coming sessions. Our bearish bets are off if the Nifty manages to take out the 16952 levels

Conclusion: With the 20 period MA on the 15 min chart now providing support to the Nifty, we expect the index to move higher to new life highs in the very near term. Crucial supports to watch for weakness are at 16847. 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.

However, we remain open to the possibility of the Nifty correcting towards the 16565 levels in the coming sessions. Our bearish bets are off if the Nifty manages to take out the 16952 levels.

Nifty – Daily Timeframe chart

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