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

The Dow Jones Industrial Average, S&P 500 index and Nasdaq Composite on Monday advanced to back-to-back record finishes, starting the week the way it ended last week.

The record finish comes as investors await semiannual testimony from Federal Reserve Chairman Jerome Powell beginning Wednesday and a batch of economic reports throughout the week, the unofficial start of corporate quarterly results.Consumer Price Index-based inflation (CPI) for the month of June rose 6.26 percent, as food prices hardened further, and transportation costs rose due to higher petrol and diesel prices.

The June print is slightly lower than 6.30 percent for May, which was the highest in six months. June is the second consecutive month when headline retail inflation is above the Monetary Policy Committee's inflation targeting range of 4 (+/-2) percent. India’s industrial output continued to moderate in May (11 month low) led by the impact of the second wave of Covid infections. The Index of Industrial Production fell 8% in May over the previous month as localised lockdowns curtailed activity. Over a year ago, when a nationwide lockdown was in place, industrial output was higher by 23.9% (vs 32% forecast). Manufacturing, Mining and Electricity sectors underperformed.

Asian shares climbed in early trade on Tuesday after Wall Street hit record highs overnight, as investors awaited the secondquarter earnings season and a batch of economic data, including key U.S. inflation figures later in the day. Indian benchmark equity indices ended flat after a higher opening on July 12. At close, the Nifty was up 2.80 points or 0.02% at 15692.60.

Nifty tried to rise post the doji formed on Friday, but could not sustain at higher levels. However the fact that it did not close at the intra day low is encouraging and keeps hopes of bulls alive. 15632-15886 is the band for the Nifty in the near term.

Daily Technical View on Nifty

Lack of strength to sustain the highs..

Observation: The market was not able to sustain the intraday gains on Monday and closed on a flat note. Nifty opened on an upside gap of 76 points, made an attempt to move up soon after the opening. It later shifted into range bound movement for some time and later showed sharp intraday weakness in the afternoon to later part of the session. The opening upside gap has been filled completed.

A reasonable negative candle was formed on the daily chart after opening higher on Monday. Technically this action signal instability of bulls to sustain the highs. The market was not able to surpass the crucial resistance of 15800 (resistance as per the concept of change in polarity) and showed weakness from the highs. The immediate support of 15630-15650 came into play once again on Monday and resulted in a minor upside recovery towards the close. Now, the intraday double bottom formation and a doji pattern at 15635 remains intact.

Nifty on the weekly chart, formed negative candles with narrow range movement in the last couple of weeks and similar movement continued till now. If support of the last two weekly low breaks on the downside at 15635, then the next support of 10 week EMA could come into scene at 15515 levels.

Conclusion: The choppy trend continued in the market and there is no respite for bulls, after showing upside bounce from the lower support (15635) in previous session. As long as the support holds, the odds of market bounce back remain alive for the next 1-2 sessions.

A decisive move below the support is likely to extend weakness to 15500 levels. On the upside bounce, the area of 15800 could be a crucial resistance to be watched.

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