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Indian markets could open mildly higher, following largely positive Asian markets today and sharply higher US markets on Wednesday - HDFC Securities 

The Dow Jones Industrial Average on Wednesday closed at a record, just shy of the 32,000 milestone, after Federal Reserve officials helped calm frayed market nerves after a run-up in bond yields briefly unsettled the bullish investing mood that’s prevailed for weeks on Wall Street.

Chairman Jerome Powell’s second day of dovish testimony helped give a boost to major benchmarks and the Fed’s No. 2, Richard Clarida, said the economy is primed to show big improvement this year, owing to more Americans getting vaccinated and the passage of fiscal-spending packages.

Oil futures jumped to a 13-week high, with the U.S. benchmark up 2.5% to settle at $63.22 a barrel, after data from the U.S. government showed weekly crude supplies edged higher. In economic data, sales of newly constructed houses ran at a 923,000 seasonally adjusted annual rate in January, trouncing the consensus of an 850,000 rate.

A surprisingly sharp rebound in the economy and earnings will drive further gains in U.S. stocks this year, though the S&P 500 is likely to end 2021 less than 6% up from its current level (up 3% so far in 2021 and after 16.3% gain in 2020), according to a Reuters poll of strategists.

Asian stocks perked up on Thursday after U.S. Federal Reserve Chair Jerome Powell reaffirmed interest rates would stay low, calming market fears that higher inflation might prompt the central bank to tighten the monetary spigot.

Indian equity benchmark indices witnessed a session marred by a technical outage that disrupted trading on the NSE for nearly four hours. At close the NSE Nifty 50 index gained 1.9% to end near the mark of 15,000 at 14,982.

Nifty has bounced up well after the 5 day fall seen recently. Although this rise is to be seen in the backdrop of the widespread weakness across Asia, the momentum in the indices could take the Nifty up to 15039-15132 band in the near term. However for the time being it seems as a correction of the recent fall and not a new uptrend.

Reliance Industries Ltd sought bids from buyers for 0.82 million standard cubic meters per day of gas from its Sohagpur coal-bed methane block (west) in Madhya Pradesh. The gas has priced a minimum of $6 at the current oil price. RIL has sought bids for the supply of gas to industries as well as city gas distributors for one year beginning April 1, 2021. RIL holds two adjacent CBM blocks SP (West) and SP(East) with an area of 995 square kilometers in the first round of CBM block bidding by the government of India in 2001.

Daily Technical View on Nifty

Observation

Markets ended with hefty gains on Wednesday on the back of an extended session due to a technical glitch at the NSE. Though markets were positive in the morning session, it was the heavy buying seen after the markets reopened at 3.45 pm that pushed the Nifty to end with hefty gains. The Nifty finally gained 274.2 points or 1.86% to close at 14,982.

Broad market indices like the BSE Mid Cap and Small Cap indices gained less, thereby under 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 gradually moved higher before witnessing some selling near the previous session’s highs. Strong buying emerged after the markets reopened at 3.45 PM which led to a breakout of Tuesday’s highs and a strong surge to close near the highs of the day, thereby reversing the recent downtrend.

We also notice that the 20 period MA has crossed above the 50 period MA on the 15 min intra charts indicating a bullish MA crossover. The Nifty could therefore move up further in the very near term towards the 15160-15280 resistances.

On the daily chart, we can see that the Nifty is holding above the previous intermediate highs of 14754 (Though it did dip below that level temporarily). We can therefore see the change of polarity principle at work. Previous resistances are now acting as support

In the process, the Nifty has closed above the 20 day SMA. Short term momentum indicators like the 14-day RSI too have bounced back.

In this scenario the Nifty could again attempt to move towards its life highs of 15432. Downside supports to watch for resumption of weakness are now at 14723- 14635.

Conclusion: The 1-2 day trend of the Nifty has now turned up with the Nifty breaking out of Tuesday’s highs. Nifty is likely to test the 15280 levels in the very near term

Our 7-day view on the market too has turned bullish with the Nifty holding above the previous intermediate highs of 14754 and closing above the 20 day SMA. The Nifty could again attempt to move towards its life highs of 15432

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