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Indian markets could open higher, in line with positive Asian markets today and positive Dow Jones Index in US markets on Thursday.- HDFC Securities

US benchmark stock indexes ended mostly slightly higher Thursday after investors sifted through another batch of economic data confirming the economic recovery from the coronavirus pandemic is on track. U.S. markets will be closed on Monday for the Memorial Day holiday, marking the start of the traditional summer vacation period.

The U.S. Labor Department said new applications for regular unemployment benefits fell for the fourth week in a row as the economic recovery from the waning coronavirus pandemic induced companies to hire more workers. Initial jobless claims sank 38,000 to 406,000 in the week ended May 22.

In other economic data, the Commerce Department said U.S. gross domestic product grew at a 6.4% annualized pace in the first quarter, unrevised from its initial estimate. Separately, durable-goods orders fell 1.3% in April while so-called core orders rose 1%. April pending-home sales fell 4.4%.

Technology stocks underperformed the more economically sensitive ones, as the economic data helped push the 10-year Treasury yield up to 1.62% from 1.58% at Wednesday’s close.

The New York Times reported that President Joe Biden will seek $6 trillion in federal spending for the 2022 fiscal year, a day before the White House is expected to unveil its budget proposal. Asian stocks put global equities on course for a seventh day of gains on Friday as investors bet the U.S. will lead the world out of the COVID-19 pandemic, with the focus turning to a multi-trillion dollar spending boost by the Biden administration.

Indian benchmark equity indices rose for the fifth consecutive session on May 27 after a mildly volatile day in terms of indices. At close, the Nifty was up 36.40 points or 0.24% at 15337.90.

Nifty continues its gradual march upwards. The high low range of Nifty on May 27 was less than 100 points and that too on an F&O expiry day. High volumes and lower volatility on the F&O expiry day suggest that the top of this move is yet to happen.15432, the earlier all time high is the next resistance for the Nifty while 15257 is the support in the near term.

Daily Technical View on Nifty

Observation

Markets surged higher on Thursday to close with healthy gains. It was the fifth consecutive session of gains for the Nifty. The Nifty finally gained 36.4 points or 0.24% to close at 15,337.85. 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.

Sectorally, the top gainers were the BSE Bankex, CD, Power and IT indices. The top losers were the BSE Realty, Telecom, Oil and Gas and Healthcare indices. Zooming into the 60 minute chart, we can see that the Nifty opened on a shaky note, but soon proceeded to move higher. Volatility in the late afternoon session curbed the gains. The short term trend nevertheless remains up as the Nifty continues to trade above the 20 period MA on the 60 min chart. 

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 Nifty has also recently made higher bottoms at 14416, 14591 and 14884 and continues to trade above the 20 and 50 day SMA, which gives further evidence of an uptrend.

Conclusion: The 1-2 day trend of the Nifty remains up with the Nifty making higher bottoms on the 60 min chart over the last few sessions and also continuing to trade above the 20 period MA on the same time frame.

On the larger daily timeframe, an upward sloping trend line continues to support the index with the Nifty also recently making higher bottoms at 14416, 14591 and 14884 and continuing to trade above the 20 and 50 day SMA, which gives further evidence of an uptrend. We expect the Nifty to move higher towards the lifetime highs of 15432 and beyond in the coming sessions. Our bullish bets are off if the Nifty moves below the lows of 14884.

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