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Indian markets could open mildly higher, despite largely negative Asian markets today and mixed but weak tech space in US markets on Tuesday - HDFC Securities 

The Dow and S&P 500 eked out gains in the final hour of trade Tuesday, while the tech-heavy Nasdaq Composite finished modestly lower, after congressional testimony from Federal Reserve Chairman Jerome Powell helped reverse a market selloff tied largely to a sharp rise in bond yields. The Fed boss, during the first of two days of testimony in Washington, vowed to keep monetary policy accommodative, and warned that the U.S. economic recovery remains uneven and far from complete.

The S&P CoreLogic Case-Shiller home price index showed house prices rose 10% in December. The Conference Board said its index of consumer confidence rose to a three-month high of 91.3 in February from a revised 88.9 in January. The Bloomberg Commodity Spot Index, which tracks price movements for 23 raw materials, rose 1.6% on Monday to its highest since March 2013. The gauge has already gained more than 60% since reaching a four-year low in March 2020.

Shares mostly fell across Asia on Wednesday as investors turned cautious, despite remarks overnight from Federal Reserve Chair Jerome Powell that attempted to ease some worries around higher interest rates and inflation.

Indian benchmark equity indices closed off the highest point of the day on Feb 23 but managed to snap a five-day losing streak. At close, the Nifty 50 index ended 32 points higher at 14,707.

Nifty halted the 5 day losing streak but the recovery or bounce was feeble. This raises doubts about sustainability of this bounce. However positive advance decline ratio raises hope for the broader markets.

Daily Technical View on Nifty

Observation: Markets ended with modest gains on Tuesday after correcting for five consecutive sessions. Despite the Nifty trading within a 200 point range, the session was volatile as there were alternate bouts of buying and selling. The Nifty finally gained 32.1 points or 0.22% to close at 14,707.8.

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.

Zooming into the Nifty 15 min charts, we observe that the Nifty opened higher and then traded within a 200 point range for the rest of the trading session with alternate bouts of up moves and down moves within the range.

We also notice that the 20 and 50 period moving average on the 15 min intra charts have flattened out, indicating that the markets could trade in a range in the very near term before resuming the downtrend.

A move below the immediate support of 14635 will accelerate the downtrend towards the next major support at 14369.

On the daily chart, we can observe that the Nifty has now reversed its recent uptrend by moving below the recent support of 14977. In the process, the Nifty has closed below the 20 day SMA. Short term momentum indicators like the 14-day RSI too are in decline mode, indicating a rapid loss in momentum.

While we remain open to pullback rallies, we expect the index to move down further in the coming sessions. We would not be surprised if the Nifty breaks the 50 day SMA currently at 14345 and moves down further towards a trend line support at 14000- 13900

Conclusion: : The 1-2 day trend of the Nifty remains down with the Nifty breaking an intraday trend line a few sessions back and continuing to trade below the 20 and 50 period MA on the 15 min intra chart. Nifty is likely to test the 14369 levels in the very near term.

Our 7-day view on the market too is bearish with the Nifty reversing the recent uptrend and closing below the 20 day SMA. With the downward momentum gathering pace, we would not be surprised if the Nifty breaks the 50 day SMA at 14369 and moves down further towards a trend line support at 14000-13900.

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