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Indian markets could open lower, in line with largely negative Asian markets today and sharply lower US markets on Tuesday - HDFC Securities

U.S. equity benchmarks ended sharply lower Tuesday, as Treasury yields extended their climb, putting pressure on the technology sector and growth-oriented shares. The 10- year Treasury yield rose about 5 basis points to 1.534% Tuesday, rising for six straight trading days and touching its highest level since June.

U.S. Treasury Secretary, Janet Yellen warned that the Treasury Department likely will exhaust extraordinary measures to keep from defaulting on its debt if Congress hasn’t acted to raise or suspend the debt limit by Oct. 18. During a Senate hearing, Federal Reserve Chair Jerome Powell and Treasury Secretary Janet Yellen both warned that a U.S. default due to a failure to raise the debt ceiling would have catastrophic consequences.

In U.S. economic data, the Conference Board said its index of consumer confidence slid to a seven-month low of 109.3 this month from a revised 115.2 in August. The U.S. trade deficit in goods rose 0.9% in August to $87.6 billion. And the S&P Case-Shiller 20-city home-price index rose 19.9% in the year to July.

Asia stocks fell Wednesday after U.S. stocks saw their worst day since May and bond yields spiked on concerns about inflation. China’s Evergrande Group is selling a stake in its regional bank for about 10 billion yuan ($1.5 billion) as it offloads assets to address its debt crisis. Nifty ended in the red on Sept 28, falling the most in the past week, though it recovered some of its morning losses. At close Nifty was down 0.68% or 121 points to 17734.

Nifty after making a low at 17576, staged a smart recovery. In this process it filled the upgap formed on Sept 23. Advance decline ratio continues to be in the negative, reflecting the broader soft sentiments. 17802-17819 is the resistance in the near term for the Nifty while 17524-17580 is the support. A breach of 17524 over the next few days could lead to much sharper fall in indices and stocks.

Daily Technical View on Nifty

Nifty : Resistance Zone 17950-18000; Support 17585

* Our advise of selling Nifty below 17792 and covering the same at its 13 days EMA, proved right, as Nifty moved in the same manner yesterday.

* Nifty broke the support of 17792 in yesterday’s trade and then fell towards 17576, which happens to be the 13 days EMA

* After testing 13 days EMA, Nifty recovered sharply by 200 points • BankNifty saw a recovery of more than 700 points from day’s low

* At present 13 days EMA support is shifted up to 17585 and that should be kept as stoploss in trading long positions

* On the upside 17950-18000 would remain strong resistance for Nifty

* However, RSI on the daily charts has formed negative divergence, which could be advance signal towards bearish trend reversal. However, unless we see price beaching support, we expect uptrend to remain intact

* 14 Days RSI is placed at 71 and previous swing bottom was seen at 68 odd levels. Any level below 68 for Nifty daily RSI would result in to bearish trend confirmation and till then view remains cautious.

* PSE and Pharma Sectors can be traded with positive bias.

Nifty – Daily Timeframe chart

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