IGI Logo

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

U.S. stocks finished higher Tuesday, with the S&P 500 and Nasdaq Composite indexes closing at fresh peaks, as bulls continued to find fuel in the formal full approval a day earlier of a COVID-19 vaccine and as investors await a speech at the end of the week from Federal Reserve Chairman Jerome Powell.

The Democratic-run House on Tuesday advanced a key measure tied to President Joe Biden’s big spending plans in a 220-212 vote, with the action coming a day later than expected due to recalcitrance from moderate House Democrats.

Asian stocks edged up Wednesday at the open after U.S. gains as strong corporate earnings and a commodity rally boosted confidence in the economic recovery from the pandemic.

Indian benchmark equity indices closed higher for the second consecutive session on Aug 24. At close Nifty was up 0.78% or 128 points to 16625.

Nifty bounced up well over the past two days and on Aug 24, it filled the downgap formed on Friday on a closing basis. Advance decline ratio also improved dramatically to the highest since Aug 12. Nifty is just 76 points away from the all time high formed on Aug 18. More than the Nifty, focus will remain for some time on the broader markets, as to how much does the broader market recover when the Nifty is near all time highs.

Daily Technical View on Nifty

Observation: Markets rallied further on Tuesday after the bounce back seen on Monday. The Nifty finally gained 128.15 points or 0.78% to close at 16,624.6. Broad market indices like the BSE Mid Cap and Small Cap indices gained more, thereby out performing the Sensex/Nifty. Market breadth was positive on the BSE/ NSE.

Zooming into the 15 minute chart, we can see that the Nifty opened with an upgap and after a minor sell off gradually rose through the day.

In the process, the Nifty has taken out its recent swing high of 16593, thereby confirming it is in a short term uptrend. The Nifty could now 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 Nifty taking out its recent swing high of 16593, it is in a confirmed short term uptrend. The Nifty could now 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