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Indian markets could open lower, following negative Asian markets today and sharply lower US markets on Wednesday   - HDFC Securities 

US stocks closed sharply lower Wednesday (their biggest one-day percentage drop in three months on Wednesday), leaving the Dow and S&P 500 index negative for 2021, on mixed earnings reports and after Federal Reserve Chairman Jerome Powell underscored the long road to economic recovery ahead, following the central bank’s first policy meeting of 2021. Investors also weighed losses from Boeing and AT&T. Boeing lost 4.1% after recording its largest quarterly loss ever.

Volume on U.S. exchanges was 23.42 billion shares, well above the 14.31 billion average for the full session over the last 20 trading days. Post market Apple and Facebook topped already-high expectations for the holiday quarter, while Tesla's results were mixed. The U.S. economy has taken a turn for the worse after a winter surge in coronavirus cases, the Federal Reserve admits, but it doesn’t think any more monetary medicine is needed right now.

The central bank kept benchmark interest rates unchanged at their near-zero level, and recommitted to leaving rates untouched until labor market conditions and inflation trends achieved the Fed’s targets. The Fed also said it would continue its crisis-era asset purchase program at the current rate of $120 billion per month.

In economic data, U.S. durable goods orders increased for the eighth month in a row, but orders excluding transportation were up 0.6%, less than economists had forecast.

Shares of Gamestop, AMC En te r tainmen t Holdings Inc., BlackBerry Ltd., headphone maker Koss Corp. and retailer Express Inc. have all experienced sharp moves without any apparent news to act as a driver, while facing a large amount of bets against them. Some hedge funds were also reported to be selling other positions to cover losses on short positions.

Asian stocks skidded on Thursday following a sharp Wall Street decline amid deepening concerns about stretched valuations in equities markets, while the dollar and bonds strengthened. Indian benchmark equity indices ended in the negative for the fourth consecutive session (first time since Sept 2020) on January 27 as profit taking ahead of the F&O expiry on Jan 28 and Union Budget on Feb 01 saw broad based selling.

The fall for the day was the largest in more than a month. At close, the Nifty was down 271.40 points or 1.91% at 13,967.50. Nifty has entered intermediate correction and 13773 is the next support. Now on the next bounce up it could face resistance in the 14281-14350 band.

Daily Technical View on Nifty

Observation: The weakness continued in the Nifty for the fourth consecutive sessions on Wednesday and the benchmark index closed the day sharply lower by 271 points. After opening on a flat note, Nifty started weakness since opening trade. The intraday upside recovery attempt was failed in between and the weakness continued for the whole session.

A long negative candle was formed, which indicate a formation of bearish candlestick pattern like 'three black crows'. Normally, the three black crows pattern is considered as a reliable bearish reversal pattern. Consisting of three consecutive bearish candles at the end of a bullish trend indicate shift of control from bulls to the bears. Hence, the weakness could continue for the coming sessions.

The crucial immediate supports of 10 period and 20 period EMA has been broken down and the upward sloping trend line (connecting 30th Oct and 21st Dec 20 swing lows) has been violated lower around 14350, as per daily timeframe chart. Currently, the Nifty is trading lower.

Nifty on the weekly chart formed a long negative candle so far, after the formation of doji and high wave in the last two weeks. The reversal pattern as per weekly chart was also seen and the Nifty is expected to slide down to its immediate weekly support of 10 period EMA at 13765. This moving average has offered base for Nifty in the past and resulted in an upside bounce from higher lows. This is going to be crucial support for Nifty ahead.

Conclusion: The near term trend of Nifty continues to be negative and the recent all time high of 14753 could be considered as a crucial top reversal pattern. The formation of bearish candlestick pattern (three black crows) could signal more weakness down to 13765 or lower in the short term. Any intraday rise up to 14150 could be a sell on rise opportunity for short term.

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