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Indian markets could open mildly lower, in line with largely negative Asian markets today and despite a positive Dow Jones index in the US on Wednesday - HDFC Securities

The S&P 500 index and Nasdaq Composite posted fresh closing record highs Wednesday after the Federal Reserve released minutes from its June policy meeting, which some market participants viewed as dovish, particularly when it comes to the progress still needed on the economic recovery.

At the Fed’s earlier June 15-16th meeting, policy makers moved up their forecasts for a policy interest rate increase and began talking about when it would be appropriate to discuss the unwinding of its asset purchases of $120 billion a month, which could be a drag on Treasury rates.

But several Fed officials also pointed to a tightening of monetary policy potentially happening sooner than expected as the economy recovers from the pandemic, even if no move to taper asset purchases seems imminent.

Crude-oil futures pivoted to a sharp decline from a modest gain in the wake of a disagreement within the Organization of the Petroleum Exporting Countries and their allies — a group known as OPEC+ — on raising output. WTI crude touched a six-year high briefly on Tuesday before retreating.

The decline in Treasury yields, with the 10-year Treasury note falling to 1.321% on Wednesday, its lowest since Feb. 18, continuing a decline that had emboldened buyers in yieldsensitive segments of the stock market, like companies in the technology-heavy Nasdaq Composite and growth stocks.

A Labor Department report Wednesday showed job openings in the U.S. rose to a record 9.21 million in May, reflecting a rising demand for labor as the economy fully reopens and businesses scramble to keep up with soaring sales for their goods and services.

Shares in Asia-Pacific were mildly lower in Thursday morning trade as the coronavirus situation in parts of the region weighed on investor sentiment. The Japanese government is set to declare another Covid-19 state of emergency in Tokyo until Aug. 22, according to local news agency Kyodo News. Australia’s New South Wales state announced Wednesday a week-long extension of Sydney’s lockdown.

Indian benchmark equity indices ended higher after opening in the negative on July 7. At close, the Nifty was up 61.40 points or 0.39% at 15879.70.

Nifty has closed at the all time high on July 07. It is just shy of the intraday high of 15915. The current momentum can take the Nifty past the previous high. Sectoral rotation continues while volumes remain subdued. On falls, Nifty could take support at 15818, while on rises, once the previous high of 15915 is sustainably breached, it could rise towards 15970

Daily Technical View on Nifty

Negation of bearish implication..?

Observation: After witnessing a weakness at higher levels on Tuesday, Nifty shifted into a sustainable upmove amidst a range movement on Wednesday and closed the day higher by 61 points.

A reasonable positive candle was formed on a daily chart with long lower shadow, after a doji formation on Tuesday. Technically this pattern indicate a counter attack of bulls from the lower levels. Hence, this indicate negation of bearish implication. A sustainable move above the high of doji (15915) could entirely nullify the bearish effect and that could open more upside in the short term. Therefore, there is no confirmation of negative reversal pattern and this could open more upside in the short term. The immediate support of 10 day EMA as per daily chart has once again offered support for the market on Wednesday and resulted in upside bounce.

Now, there is another chances of Nifty reaching towards the crucial upper resistance of 15900 levels again in the next 1-2 sessions. We observe decreasing downside strength during pullback declines after hitting the said hurdle in the last three occasions. Such repeated testing of crucial resistance with decreased downside momentum during pullback could eventually result in a decisive upside breakout of the resistance (15900) in the near term.

Conclusion: The short term uptrend status of the market remains intact and the market is inching closer to witness sharp upside breakout of 15915 in the next couple of sessions.

Intraday consolidation could be expected in the subsequent session around the hurdle before the upside breakout. The next upside target to be watched post upmove is around 16100-16200 in a short period of time. Immediate support is placed at 15800.

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