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Indian markets could open mildly lower, in line with largely negative Asian markets today and a negative Dow Jones index in the US on Tuesday..…HDFC Securities

U.S. stocks ended most lower Tuesday, with the Dow Jones Industrial Average and S&P 500 index pulling back from record levels as the Nasdaq rose to a new peak, with financial and energy stocks weakening most as bond yields and oil prices fell.

Global stocks mostly fell Tuesday along with bond yields and crude prices, as China's latest tech crackdown and expectations of a hawkish Fed report on Wednesday waved red flags at investors.

Oil prices whipsawed Tuesday, hitting six-year highs before pulling back sharply, as traders weighed whether the stalemate over a call to further relax output curbs would keep crude off the market or spark a production free-for-all.

In the US, the Institute for Supply Management on Tuesday said its service sector purchasing managers index fell to 60.1% in June from a record 64% in May. The drop in activity was due to restaurants and retailers having difficulty finding workers as well as supply chain disruptions.

Most Asian stocks fell Wednesday after U.S. shares snapped a winning streak and Treasury yields retreated on concerns about the economic outlook and risks from Covid-19 variants.

Indian benchmark equity indices ended minorly in the negative on July 6 after once again facing resistance at 15915 levels. At close, the Nifty was down 16.10 points or 0.10% at 15818.30.

Nifty corrected mildly after a two day rise. This happened with higher volumes. Nifty also made a double top at 15914 levels. On daily charts it has made a bearish gravestone doji like pattern. Hence at 15850+ levels, a lot of selling pressure seems to be emerging from investors. 15738 is the support for the Nifty in the near term while 15915 continues to be resistance.

Daily Technical View on Nifty

Formation of ‘grave stone doji’ at highs..

Observation: After showing sustainable upmove in the last couple of sessions, Nifty witnessed sharp intraday profit booking at the hurdle of 15900 levels and slipped into weakness on Tuesday and closed lower by 16 points. After opening on a slightly negative note, the market has shifted into a sustainable intraday upside move for the better part of the session. Intraday profit booking emerged from the day's high of 15014 at 1.54 pm and Nifty started gradual weakness from the highs. The intraday weakness got intensified in the later part of the session and closed near the lows.

A small body candle was formed with long upper shadow on the daily timeframe chart. Technically, this pattern indicate a formation of 'grave stone doji'. Normally, formation of such doji pattern at the hurdle/after the reasonable upmove could signal downward reversal in the underlying, post confirmation. Hence, bulls needs to be cautious about long positions at the highs and subsequent weakness from here is likely to bring bear's into action.

The upper area of 15900-15915 has been tested for four occasions in the last couple of months. Last turn down from this area has resulted in a minor downward correction amidst a choppy trend for four sessions in early part of June. Hence, the next move of index is going to be crucial. The intraday chart of 60 mins shows a formation of double top at 15915 levels.

Conclusion: The short term uptrend of Nifty seems to have encountered profit booking around 15900 levels again.

Further weakness on Wednesday could confirm negative reversal and that could open another round of downward correction in the market from highs. A move above doji at 15915 could only negate this bearish pattern. Immediate support is placed at 15730.

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