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Indian markets could open higher, in line with positive Asian markets today and despite mixed US markets on Wednesday..…

The blue-chip Dow Jones Industrial Average edged up to another record close Wednesday, despite concerns about rising inflation and the eventual withdrawal of flush monetary policy as the economy reopens in the wake of the pandemic, though technology stocks fell for a fourth straight day. Market participants also parsed dovish comments from Fed staffers and economic data showing a healthy economic recovery.

Investors also were focused on economic data, with the Institute for Supply Management reporting growth in service-oriented businesses, such as retailers, restaurants and healthcare providers slipped to 62.7% last month from 63.7% in March. That contrasts with an increase in the IHS Markit service sector purchasing managers index for April to 63.5, up from 59.7 in March, marking the sharpest upturn in private sector output since data collection began in October 2009.

On the jobs front, the U.S. gained 742,000 private-sector jobs in April (biggest gain in 7 months), below the 800,000 increase economists polled by The Wall Street Journal and Dow Jones expected. The Bloomberg Commodity Spot Index returned to its highest level since 2011 as growth bets boost demand, while poor weather and transportation bottlenecks threaten supply.

Asia-Pacific stock markets were mostly higher on Thursday as after technology shares weighed on U.S. markets, offsetting optimism over solid corporate earnings and economic reports.

India benchmark equity indices rose on May 05 after the RBI announced measures to further support the economy as coronavirus cases continue to surge. At close the NSE Nifty 50 rose 0.84% or 121 points to 14618.

Nifty formed an inside day on May 05, meaning that the high low range for the day was within the high low range of the previous day. However the Nifty closed near its intra day high. Advance decline ratio too became positive. 14461-14723 continues to be the range for the Nifty in the near term. In case we do not see a negative day on May 06, then we may have seen a near term bottom at 14416 on May 03.

Daily Technical View on Nifty

Observation:

Markets bounced back smartly on Wednesday after a positive opening. The Nifty finally gained 121.35 points or 0.84% to close at 14,617.85. Broad market indices like the BSE Mid Cap index gained more, thereby out performing the Sensex/Nifty. Market breadth was positive on the BSE/NSE.

Sectorally, the top gainers were the BSE Healthcare, Bankex, Metal and IT indices. The top loser was the BSE Realty index.

Zooming into the 15 minute chart, we can see that the Nifty opened with an up gap on Wednesday. While there was some selling pressure thereafter, the index soon moved into a trading range before witnessing an upsurge in the late afternoon session to close at the highs of the day.

The index thus managed to hold above the previous session’s low and made a nice base around the 14530- 14545 levels. This is a positive signal for the very near term.

It will be important that the Nifty holds above the recent low of 14530 for the very near term uptrend to continue.

On the daily chart, while the Nifty has recently corrected from the high of 15044, the index 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.

With the strong bounce back seen on Wednesday, traders will need to watch if the Nifty can now hold above the crucial supports of 14506-14461 in the very near term. Upside acceleration is likely to pick up once the immediate resistances of 14723 are taken out.

These are crucial resistances as they also roughly correspond to the 50 day SMA. In this scenario, the Nifty could once again be headed towards the recent highs of 15044.

Conclusion: The 1-2 day trend of the Nifty is now up with the index managing to hold above the previous session’s low and making a nice base around the 14530-14545 levels before closing near the highs of the day.

On the larger daily timeframe, an upward sloping trend line continues to support the index with the Nifty also bouncing back strongly on Wednesday and holding above the recent lows of 14506-14461. We therefore stick with our view that the Nifty could move higher in

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