IGI Logo

Indian markets could open lower, following negative Asian markets on Tuesday and mixed Asian markets today and rangebound US markets on Monday and Tuesday - HDFC Securities 

The S&P 500 and Nasdaq Composite clinched closing records Monday, but the Dow lagged behind its peers, in volatile trading as investors focused on a raft of corporate earnings set to be released this week amid rising cases of Covid-19 and tightened lockdowns to attempt to limit the spread of the pathogen. The Ministry of Road Transport and Highways (MoRTH), in its vehicle scrappage policy approved on January 25, confirmed the scrapping of government and PSU vehicles older than 15 years wef April 01, 2022.

Road transport and highways minister Nitin Gadkari on Monday approved a proposal to impose a green tax on some category of vehicles, setting the stage for phasing out old pollution-causing vehicles. The proposal will be referred to the states for consultation before it is notified, an official statement said. Stocks finished slightly lower Tuesday as investors dug through a slew of high-profile corporate earnings reports a day after the S&P 500 and Nasdaq Composite scored another round of all-time highs.

Investors continue to track negotiations around President Joe Biden’s push for $1.9 trillion in additional COVID-19 aid spending, which faces tough talks in a narrowly divided Senate as an impeachment trial for former President Donald Trump looms.

The International Monetary Fund on Tuesday raised its forecast for global economic growth in 2021 but warned that there was still “extraordinary uncertainty” about the outlook. The IMF projected an impressive 11.5 per cent growth rate for India in 2021, making the country the only major economy of the world to register a double-digit growth this year amidst the coronavirus pandemic. The Conference Board said its index of consumer confidence rose to 89.3 this month from a revised 87.1 in December.

China’s central bank said the loose financial conditions in China could create an asset bubble and the bank also withdrew $12 billion of liquidity from the banking system, causing short-term borrowing rates for banks to pop more than 2%. Meanwhile Profits at China’s industrial firms surged 20.1% year-on-year in December to 707.11 billion yuan ($109.40 billion). The rebound followed a 15.5% gain in November and marked the eighth month of growth in a row.

The European Union has threatened to impose tight export controls imminently on Covid-19 vaccines made in the group of 27 member states, as it lags behind the U.K. and U.S. on inoculations, with coronavirus continuing to rage. The U.S. Federal Reserve is due to announce results of its two-day policy meeting on Wednesday. Analysts expect the Fed to stick to its dovish tone to help speed the economic recovery.

Daily Technical View on Nifty

Observation: Nifty continued with decline for the third consecutive sessions on Monday and closed the day lower by 133 points. After opening on an upside gap of 105 points, the market slipped into intraday weakness in the early part of the session. The weakness got intensified in the afternoon and Nifty closed near the lows.

A long bear candle was formed on Monday, which is back to back for the three consecutive sessions. The three sessions consecutive decline was formed in the market after the time span of four months. Hence, this pattern could be in-line with the reversal formation in the market at the highs. Hence, the last swing high of 14753 of 21st Jan could be a reversal high for the near term. The immediate supports like 10 day EMA has been broken at 14450 in the last session and the Nifty is currently placed at the verge of moving below another short term support of 20 day EMA at 14260. Hence, a move below this area could open more weakness in the short term.

Nifty on the weekly chart, formed a doji and high wave type candlestick pattern back to back in the last two weeks. This market action could be considered as a beginning of major profit booking in the market from the high. The key economic event of Union Budget 21 is scheduled on 1st Feb, which is expected to be an event for the market. Conclusion: The short term trend of Nifty continues to be negative.

The consistent decline of the last three sessions could be hinting at the possibility of reversal in the market. A sustainable move below 14200 is expected to drag Nifty down to 13800 levels. Any upside towards 14360-14400 could be a sell on rise opportunity.

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