IGI Logo

Indian markets could open higher, following largely positive Asian markets today and sharply higher US markets on Tuesday -  HDFC Securities 

U.S. stocks finished sharply higher on Tuesday, moving towards new records with investors encouraged by news on the pace of vaccinations in the U.S., the prospect of more fiscal aid from Congress, and a decline in the frenzy of retail trading in heavily shorted stocks.

Google parent Alphabet and Amazon reported their results after the close and both reported better-thanestimated sales. The reopening path in the US looks brilliant as new Covid-19 cases in the U.S. are slowing and vaccine rollout is accelerating. The trading drama around GameStop and other shares triggered liquidation of long positions by hedge funds and other traders.

GameStop rose about 400% last week, but has lost more than 70% of its value since Friday. Oil futures rose strongly, with the U.S. benchmark rising 2.3% at $54.76 a barrel, its highest closing level in more than a year. April silver fell 10% as a hike in margin requirements (up 18%) appeared to squelch an attempted short squeeze by individual investors.

Australia’s central bank said it would extend its quantitative easing program to buy an additional $100 billion of bonds. Initial European Union estimates showed the euro zone economy contracted less than expected in the fourth quarter but was headed for another, probably steeper decline, in the first quarter of 2021. China’s services sector activity grew at its slowest pace in nine months in January.

The Caixin/Markit services Purchasing Managers’ Index (PMI) dropped sharply to 52.0, the lowest since April, from 56.3 in December. A single-judge bench of Justice JR Midha of the Delhi High Court has directed a status quo on the Rs 27,513-crore deal between the Future Group and billionaire Mukesh Ambani-led Reliance Retail Ventures Ltd. This is a temporary setback for the Future group and Reliance. Asian markets moved higher during early trading as governments around the world looked poised to boost spending to help economies recover from the coronavirus and vaccine roll-out programs accelerated.

Indian benchmark equity indices ended higher for the second day in a row on Feb 02 on the back of growth oriented announcements by the Finance Minister in the Union Budget 2021 on Feb 01.The Nifty opened gap up and then remained in a narrow range through the day.

At close, the Nifty up 366.70 points or 2.57% at 14,647.90. Nifty rose to just shy of the previous all time high of 14754, by making an intraday high of 14732. A move above 14754 is essential to convince more buyers to buy now or on the next dip. Volumes and sentiments currently favour this happening.

Daily Technical View on Nifty

Observation: Markets ended with hefty gains on Tuesday as the rally continued post Budget. The Nifty finally gained 366.65 points or 2.57% to close at 14,647.85. Broad market indices like the BSE Mid Cap and Small Cap indices gained less, thereby under performing the Sensex/Nifty.

Market breadth was positive on the BSE/NSE. Sectorally, the top gainers were the BSE Auto, Capital Goods, Realty and Bankex indices. There were no losers. Zooming into the Nifty 15 min charts, we observe that the Nifty opened with an up gap and moved higher before correcting and then trading in a range.

The 20 period MA was providing healthy support to the index. We expect this MA to provide support to the index as it continues to move higher towards the 14800 levels in the very near term. On the daily chart, we can observe that the Nifty has convincingly reversed the recent downtrend by moving up from a trend line support and convincingly closing above the 50 day SMA on Monday. With today’s further up move, the Nifty has closed above the 20 day SMA.

The index could now attempt to make new life highs in the coming sessions. It is important that the Nifty does not move below the recent low of 13661 on any corrections for the short term uptrend to remain intact. We recommend using a selective buying approach and accumulating quality stocks from outperforming sectors. Strict stop losses need to be kept to control risk.

Conclusion: The 1-2 day trend of the Nifty remains up with the index surging higher and the 20 period MA providing support on the 15 min charts. Nifty is likely to test the 14800 levels in the very near term. Our 7- day view on the market too remains bullish as the Nifty has convincingly reversed the recent downtrend by moving up from a trend line support and convincingly closing above the 20 day and 50 day SMA. Our bullish bets for the next 7 sessions would be off if the Nifty moves lower and closes below the 14289 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