IGI Logo

Indian markets could open higher, in line with higher Asian markets today and positive US markets on Monday - HDFC Securities

U.S. stock benchmarks booked new records Monday, as investors appeared to wager that the Federal Reserve’s Chairman Jerome Powell will adopt a more dovish posture than previously anticipated when he speaks later this week at the annual Jackson Hole monetary policy symposium. The Food and Drug Administration approved its first Covid-19 vaccine by Pfizer Moderna. This also improved sentiments.

IHS Markit’s flash U.S. composite index, which tracks the manufacturing and services sectors, fell to 55.4, marking an eightmonth low. The flash services index fell to a reading of 55.2 from 59.9, also marking its lowest since December, with economists on average expecting a reading of 59.7, while manufacturing was 61.2, a four-month low, compared with July’s all-time high reading of 63.4.

India’s Union government on August 23 announced that it will monetise assets worth Rs 6,00,000 crore between 2021-22 and 2024-25 under the National Monetisation Pipeline (NMP) scheme, which was launched by Finance Minister Nirmala Sitharaman in New Delhi. She said assets being given out under the National Monetisation Pipeline will still be owned by the government, and will be returned to the government after a period of time.

India's southwest monsoons is likely to be below normal considering the present trajectory, said private weather forecasting service, Skymet, in a revised update. Skymet is now forecasting monsoon rains to be at 94% of the long-period average with a (+/-) 4% margin of error from June to September, according to its updated forecast published on Monday. Pan-India seasonal rainfall deficiency is at 9% till mid-August. In terms of geographical risk, Gujarat, Rajasthan, Odisha, Kerala, and Northeast India are likely to be hit with deficient rains. The chance of drought over Gujarat and west Rajasthan appears imminent.

Shares in Asia-Pacific largely rose in Tuesday morning trade, after the tech-heavy Nasdaq Composite jumped to a record closing high following the U.S. Food and Drug Administration’s full approval of Pfizer and BioNTech’s Covid-19 vaccine.

Indian benchmark equity indices ended in the positive on Aug 23 after a volatile session. In the process the Nifty broke a 2 day losing streak. At close, the Nifty 50 advanced 0.28% or 46 points to 16,496.45.

Nifty filled the downgap made on Friday by opening higher but closed below it as it gave away a large part of intra day gains. However the fact that it recovered from the intra day low and did not make a new low compared to the previous day is encouraging. Advance decline ratio improved marginally compared to the previous day but is still much below 1:1. 16376-16396 is the important support band now for the Nifty, while a close above 16569 would result in return of some confidence in the markets.

Daily Technical View on Nifty

Observation: Markets bounced back on Monday after the sell off seen on Friday. The Nifty managed to hold above its recent lows. The Nifty finally gained 46 points or 0.28% to close at 16,496.45. Broad market indices like the BSE Mid Cap and Small Cap indices lost more, thereby under performing the Sensex/Nifty. Market breadth was negative on the BSE/NSE.

Zooming into the 60 minute chart, we can see that the Nifty opened on a positive note and corrected from the highs. A recovery from the lows helped the index to end in positive territory. With the 15 min chart now making a higher top, the very short term trend has turned up. The Nifty could attempt to move higher towards the 16702 levels in the very near term.

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. Upside target implications are at 17000. However, we remain open to the possibility of the Nifty correcting towards the 16162 levels in the coming sessions. Our bearish bets are off if the Nifty manages to take out the 16702 levels.

Conclusion: With the 15 min chart of Nifty now making a higher top, the very short term trend has turned up. The Nifty could attempt to move higher towards the 16702 levels in the very near term.

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 towards the 17000 levels. However, we remain open to the possibility of the Nifty correcting towards the 16162 levels in the coming sessions. Our bearish bets are off if the Nifty manages to take out the 16702 levels.

Nifty – Daily Timeframe chart

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