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

U.S. stocks closed lower Thursday, despite last-minute moves from Congress to avert a partial government shutdown, as Wall Street wrapped up the last trading day of a tough September and third quarter. Putting September’s turbulence in perspective was the performance of the CBOE Volatility Index which finished almost 40% higher for the month. For the month, the Dow recorded a 4.3% decline, and the S&P 500 was down 4.8%, snapping a seven-month winning streak. The Nasdaq Composite was off 5.3%, its worst September in a decade.

Congress voted through a short-term spending bill to keep the U.S. federal government running through early December, acting with only hours remaining before a partial shutdown. Congress has yet to raise the federal debt ceiling though.

Investors were also digesting fresh comments from Fed Chairman Jerome Powell, on inflation remaining high for the time being due to supply bottlenecks as the economy recovers from the pandemic, as he testified to a House panel on COVID relief, along with Treasury Secretary Janet Yellen.

Central Banks of Czechoslovakia, Mexico and Colombia raised rates by 75 bps (to 1.5%), 25 bps and 25 bps respectively.

The Centre's fiscal deficit for April-August came in at Rs 4.7 lakh crore, or 31 percent of the full-year budget estimate, compared with 109 percent for the same period last year. The government increased the domestic price of natural gas for the second half of the ongoing fiscal, tracking the global surge in energy costs. Gas under the administrative price mechanism will cost 62% higher, at $2.9 per metric million British thermal units, for October 2021-March 2022

Eight core industries grew 11.6% in August over a year ago aided by growth in electricity, refineries, cement, and coal output offset to some extent by fall in fertiliser and crude oil production. . Growth in these sectors picked up compared to 9.9% year-on-year in July. Between July and August, activity moderated sequentially by 0.9%.

India’s current-account balance swung to a surplus last quarter, thanks to robust services exports and a narrower trade deficit. The current account, the broadest measure of overseas trade, was in a surplus of $6.5 billion, or 0.9% of gross domestic product, in the three months ended June. The account was in a deficit of $8.1 billion in the January to March period, while it was in a surplus $19 billion, or 3.7% of GDP, in the comparable year-ago period. The latest surplus came on the back of a contraction in the trade deficit to $30.7 billion from $ 41.7 billion in the preceding quarter, and an increase in services receipts. Foreign direct investment recorded an inflow of $11.9 billion as against outflow of $0.5 billion a year ago.

Data To Watch 10:30am: Markit India Manufacturing PMI for Sept

Asian equities followed Wall Street sharply lower on Friday as risk sentiment soured amid growing worries that inflation may persist even after global growth has peaked. Markets in Hong Kong are closed for a holiday on Friday, while those in mainland China are closed for the Golden Week holiday from Friday till October 7.

Nifty closed down for the third consecutive session on Sept 30 to close the quarter with gains of 12%. At close the Nifty was down 0.53% or 93 points at 17618. Nifty has fallen for three consecutive sessions – the longest streak in almost two months. While the Nifty has not fallen with deep cuts and recoveries have been witnessed post intra day selloffs, the fact that the Nifty fell for three straight sessions is a bit unnerving. 17576-17608 is the support band for the Nifty in the near term. A breach of this band could take it to 17355, post that a larger fall may ensue. On rises, 17781-17802 could act as a resistance.

Daily Technical View on Nifty

Nifty : Bearish Trend Reversal

* Nifty ended the session with the loss of 0.535 to close at 17618

* Nifty closed very near to its 13 days EMA support

* SGX Nifty is suggesting gap down opening of more than 150 points

* Gap down opening would breach the support of 13 days EMA in first half of the session, which would be considered bearish.

* Deep support for the Nifty is seen at 17400 odd levels, where upward sloping trend-line provides the demand zone

* RSI has confirmed the negative divergence on t he daily chart, wichis negative development for short to medium term trend

* Indicators like MACD has also turned bearish with negative crossover on its signal line on daily charts

* Sectors which looks weak are private banks a n d Cements. Sector which could outperform are real estate and PSUs.

Nifty – Daily Timeframe chart

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