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Indian markets could open mildly higher despite largely mildly negative Asian markets today and mixed US markets on Tuesday.- HDFC Securities

U.S. stocks ended mostly higher Tuesday after a choppy day of trading that saw the technology sector under pressure, with the Dow Jones Industrial Average and S&P 500 closing with gains while the tech-heavy Nasdaq Composite index fell.

Energy shares rallied, however, as oil prices bounced despite the White House announcing the U.S. would release crude from its Strategic Petroleum Reserve in a coordinated move with other countries to try to lower the cost of gasoline. A coordinated release from government oil reserves led by the United States may add about 70 million to 80 million barrels of crude supply, smaller than the more-than-100 million barrels the market has been pricing in, analysts at Goldman Sachs said. The market may be pricing in a rise in interest rates beginning in the middle of next year, which is not positive for long-duration assets like technology stocks.

The so-called flash survey of U.S. manufacturers rose to a two-month high of 59.1 in November from 58.4 in the prior month, while a similar survey of service-oriented companies fell to a two-month low of 57 from 58.7. The au Jibun Bank Flash Japan Manufacturing Purchasing Managers' Index (PMI) rose to a seasonally adjusted 54.2, its fastest pace of expansion since January 2018. The reading, which was lifted by a pickup in overall output and new orders, compared to a final 53.2 in the previous month.

The au Jibun Bank Flash Services PMI Index improved to a seasonally adjusted 52.1 from the previous month's final of 50.7, putting it more firmly into expansion territory. The reading marked the fastest pace of growth since September 2019, which was just before a sales tax hike hit consumer confidence. IHS Markit's Flash Composite Purchasing Managers' Index for Europe, a good indicator of overall economic health, jumped to 55.8 in November from 54.2 in October.

New Zealand’s central bank raised interest rates to 0.75% to curb price pressures and projected 2% benchmark borrowing costs by the end of 2022.

Asian stocks were steady Wednesday and Treasury yields held a climb as traders weighed the prospect of tighter monetary policy to curb inflation. Crude oil trimmed an advance.

Nifty recovered from early losses on Nov 23 and ended in the positive, breaking a 4 day losing streak. At close Nifty was up 0.50% or 86.8 points at 17503.3. Nifty bounced up well after making a low of 17216. Advance decline ratio also went deeply in the positive. 17613 could be the next resistance for the Nifty while 17280 could be a support. The broader market having fallen sharply could bounce up longer than the Nifty.

Daily Technical View on Nifty

Market: Observation

* Markets bounced back on Tuesday after the sharp correction seen on Monday. The Nifty finally gained 86.8 points or 0.5% to close at 17,503.35. 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.

Nifty: 60 min chart indicates downtrend intact

* Zooming into the 60 minute chart, we can see that the index opened with a down gap but then recovered during the trading session to finally close in the green. The Nifty index nevertheless remains in a short term downtrend.

* This is evidenced by the lower tops and lower bottoms seen in last six trading sessions. Also the 20 period MA continues to remain below the 50 period MA. While short term bounces are possible, we expect the downtrend to continue. Immediate downsides are at 17254-17216.

Nifty: Made a new 12 week low

* On the daily chart, we can see that the Nifty remains in a downtrend despite the bounce back seen on Tuesday. The 20 day SMA is also sloping down and on the verge of crossing below the 50 day SMA. Weekly momentum readings like the 14-week RSI are in decline mode.

* While we remain open to pullback rallies, we expect the Nifty to eventually move lower in the coming sessions. A larger correction is likely once the 17254-17216 supports are broken.

Nifty – Daily Timeframe chart

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