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Indian markets could open mildly higher, in line with largely positive Asian markets today and despite mixed US markets on Tuesday- HDFC Securities

While the Dow managed to end up, other U.S. stock indexes finished lower Tuesday, with the Nasdaq suffering its worst one day fall since March, as investors sifted through comments from U.S. Treasury Secretary Janet Yellen who said interest rates could rise a bit if the economy overheated. The Nasdaq ended sharply lower on Tuesday as investors dumped megacap growth stocks to seek shelter in more defensive parts of the market, amid concerns on rising interest rates and uncertainty over an upcoming jobs report.

U.S. Treasury Secretary Janet Yellen said Tuesday that interest rates may have to rise to keep a lid on the burgeoning growth of the U.S. economy brought on in part by trillions of dollars in government stimulus spending. Later she said that she seeno inflation problem brewing, downplaying earlier comments.

The U.S. trade deficit rose 5.6% in March to a record $74.4 billion (highest ever since data has been compiled fromJan 1992), reflecting a robust appetite for consumer goods as the economy gains speed. Data also showed U.S. factory orders rose 1.1% in March. Durable-goods orders rose a revised 0.8%. The trade imbalance with China increased more than 22% to $36.9 billion. The deficit with Mexico rose 23.5% to $8.4 billion.

Asian shares were largely up on Wednesday even as sentiment took a knock from a selloff in large cap Wall Street tech darlings, combined with talk of rising U.S. interest rates. Markets in China and Japan remain closed for public holidays. South Korean markets are also shut.

Reserve Bank of India Governor Shaktikanta Das will make an unscheduled speech Wednesday, amid a ferocious new coronavirus wave that is devastating the country. The address will be broadcast at 10 a.m. local time, the RBI said on Twitter.

Indian benchmark indices fell for the second time in three days on May 04, following concerns over FPI selling in the recent past and further action expected to combat the Covid situation. The Nifty started to fall post 1250 Hrs. At close the Nifty was down 138 points or 0.94% to 14497

Nifty has come under pressure as India's official tally of coronavirus infections surged past 20 million, Indian Premier League cricket tournament has been suspended with immediate effect and Corporate management commentary remained cautious on Q1 performance due to lockdowns. Fears of stricter lockdowns also brought caution amongst traders. 14416-14634 is the band for the Nifty over the near term.

Daily Technical View on Nifty

Observation:

After showing fine upside recovery from the lows on Monday, Nifty witnessed a sharp sell on rises action on Tuesday and showed sharp weakness. After opening on an upside gap of 53 points, Nifty made an attempt to move up in the early part of the session. Intraday weakness got triggered from a day's high of 14723 and the market started weakness from the highs. Intraday upside recovery attempt has failed and the weakness got intensified in the afternoon to later part of the session and the market closed near the lows

A long negative candle was formed after a opening higher and the negative candle has engulfed more than 3/4th of previous bullish candle of Monday. This is negative indication and signal a lack of strength in the market to sustain highs or sharp sell on rise is underway. This pattern could signal further weakness down to the immediate support of 14400 or lower in the short term.

A decisive move below 14400 could pull Nifty down to a crucial lower support band of 14200 - 14150 levels and that support area is expected to offer support for the market from the lower levels. The higher bottom formation at the low of 14416 of Monday has not been confirmed on Tuesday and that pattern is now placed at the danger of negation

Nifty as per weekly chart indicate that the market is struggling to sustain the highs, after a fine intraweek upmove of last week

Conclusion: The lack of strength to sustain the highs continued in the market and the fine upside bounce of previous session has been negated. The market could slide down further and the next set of supports are seen around 14400 and the next 14200-14150 levels, where one may expect another round of upside bounce from the lows. On the way up 14600-14650 could act as a hurdle.

Nifty – Daily Timeframe chart

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