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

U.S. stocks ended sharply lower on Thursday, seeing the biggest one day slide since early March, following a news report that said President Joe Biden is weighing a proposal which would nearly double the capital-gains tax for wealthy individuals earning more than $1 million a year to 39.6% from the current base rate of 20%. Combined with an existing surtax on investment income, Bloomberg said, federal tax rates for the wealthiest investors could be as high as 43.4%.

Equities were buoyed in earlier activity, with quarterly corporate results largely beating Wall Street expectations this earnings season and applications for weekly jobless benefits claims declining. Weekly jobless benefit claims fell by 39,000 to 547,000 in the week ended April 17, the lowest since before the pandemic struck.

Earlier Thursday, as expected, the European Central Bank left policy unchanged following its Governing Council meeting. ECB President Christine Lagarde said they didn’t discuss phasing out its bond-buying program at the meeting, saying such a move would be “simply premature.”

The monetary policy committee (MPC), the Reserve Bank of India's rate-setting panel, is worried that a resurgence in COVID19 spread, if not contained, can impact the early signs of recovery in the economy, the minutes of its meeting held from April 5-7 suggest. Members have also raised concerns about persistently high retail inflation. But, the minutes confirm the panel's continued focus on GDP-growth revival over the near-term pressure on the inflation front.

Fitch Ratings has affirmed India’s sovereign rating at ‘BBB-’ with a negative outlook. The negative outlook, it said, reflects lingering uncertainty around the debt trajectory following the sharp deterioration in India's public finance metrics due to the pandemic shock from a previous position of limited fiscal headroom

Asian shares were mixed early on Friday after the European Central Bank left policy unchanged, extending a rebound following a sharp selloff earlier in the week, but gains were capped as investors considered the impact of a possible U.S. capital gains tax hike

Indian benchmark equity indices recovered smartly on April 22 after opening lower and making an intra day low in the first 5 minutes of trade. At close the Nifty ended 0.77% or 109.8 points higher at 14406.

Nifty after making a new recent low of 14151, has made a bullish piercing pattern on April 22. However crossing 14526 will be crucial for any further upmove. Advance decline ratio is in the positive suggesting that investors are comfortable holding on to and buying small and midcaps ahead of the results season.

Daily Technical View on Nifty

Observation:

After showing sharp sell on rise on Tuesday, Nifty witnessed an upside bounce again from the support of 14200 levels on Thursday and closed the day higher by 109 points. Nifty opened on a downside gap of 77 points and slipped further into weakness after the opening

A sustainable intraday upside recovery has emerged from the day's low of 14151 and the upside momentum was seen in the afternoon to later part of the session. Intraday minor declines were used as buy on dips for the day

A long bull candle was formed on the daily chart with minor lower shadow. Technically, this pattern could mean another upside bounce from the crucial support of 14200 levels. New swing low was formed at 14150, before showing upside bounce from the lows. The candle pattern of Thursday is signaling another short term upside bounce in the market. But, the sustainability at the highs could be doubtful. Immediate resistance is placed at 14500 levels.

Nifty on the intraday chart like 60 mins timeframe is placed to form yet another lower top around 14425-14450 levels. The Intraday chart pattern of the last four sessions signal a formation of descending type triangle pattern (consistent lower highs and repeated hitting of lower support).

This pattern could indicate chances of another sell on rise in the next few sessions and the revisit of lower support at 14150-14200 levels again in the near term.

Conclusion: The short term trend of Nifty seems to have reversed up from the lows. But the fear of sharp sell on rise is still persist until 14560 level is surpassed decisively on the upside. The intraday chart setup could signal a possibility of another sell on rise around 14450-14500 levels in the next 1-2 sessions

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