IGI Logo

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

U.S. stocks closed sharply lower Monday (its biggest one-day fall since October), joining the selloff in global equities, as concerns grew about the spread of the delta variant of the coronavirus that causes COVID-19, and as tensions ratcheted up between the U.S. and China. The Biden administration on Monday blamed China for a hack of Microsoft Exchange email server software that compromised tens of thousands of computers around the world earlier this year. Democratic senators also were expected to make public on Monday a plan to raise $14 billion annually by imposing taxes on China and other countries not significantly reducing emissions that warm the planet

US Crude-oil futures settled below $67 a barrel on Monday (down 7.39% to $66.50 per barrel), their biggest daily percentage drop since March, following a weekend deal by the OPEC+ group to boost oil production.

The yield on the 10-year Treasury note was down 11.9 basis points, dipping below 1.18% at its lows and deepening its decline to levels not seen since February. Economists at Bank of America downgraded their forecast for U.S. economic growth this year to 6.5%, from 7% previously.

On Tuesday, China kept unchanged its benchmark lending rate for corporate and household loans — the one-year Loan Prime Rate (LPR) held steady at 3.85% while the five-year LPR was also left at 4.65%.

Asian stocks were down early on Tuesday as growing fears the spreading Delta variant of the coronavirus would harm the global economic recovery sent riskier assets, including oil, skidding sharply.

Nifty fell on July 19 after a weak opening following negative cues from Asian markets. Fall in Nifty on July 19 was the highest in points and percent basis since April 30.

Nifty has fallen sharply with a downgap and the next support is 0.8% away. Retail investors may review their portfolios and start raising some cash / book profits partly. In case the Nifty settles and starts to rise again they could find another set of stocks to rise on.

Daily Technical View on Nifty

False upside breakout of 15900..

Observation: After showing range bound action with weak bias at the all time high of 15962 levels on Friday, Nifty slipped into a sharp weakness on Monday and closed the day lower by 171 points. After opening on a downside gap of 169 points, the market made an attempt to move up amidst a range movement in the early-mid part of the session. Intraday upside recovery attempt has failed, but minor upside recovery was observed towards the end. The opening downside gap remains partially filled.

A doji type candle pattern was formed (not a classical one) with gap down opening on the daily chart, which signal another round of downward correction from the swing highs. The weakness of Monday has confirmed a false upside breakout attempt at 15900 levels. This is negative indication for the market, as such false upside breakouts more often reaches down to the lower end of a consolidation/range move or moves below that. Hence, one may expect Nifty to slip further down to 15635 levels or may slide lower in the short term.

At the same time, a formation of unfilled opening downside gap near swing high hints at a possibility of a formation bearish breakaway gap and these gaps are more often formed near the important top reversal patterns. Hence, the recent all time high of 15962 could be considered as an important top for short term.

Conclusion: The short term trend of Nifty seems to have turned down, after a display of lack of strength at the new highs. The overall chart pattern signal chances of market sliding down to the crucial support of 15635 levels in the short term. But, there is a higher possibility of Nifty moving below this support over the period of time. Any upmove from here could find selling pressure around 15825 levels.

To Read Complete Report & Disclaimer Click Here

Please refer disclaimer at https://www.hdfcsec.com/article/disclaimer-1795

SEBI Registration number is INZ000171337

Views express by all participants are for information & academic purpose only. Kindly read disclaimer before referring below views. Click Here For Disclaimer