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Indian markets could open higher, in line with mostly positive Asian markets today and higher Nasdaq Composite in US markets on Wednesday - HDFC Securities

U.S. stocks finished mostly higher Wednesday, after minutes from the Federal Reserve’s last policy meeting reinforced expectations the central bank will begin tapering its $120 billion a month in bond purchases before year-end in a sign that the U.S. economy has made a significant recovery from the worst shocks of the pandemic.

Data showed that the U.S. consumer-price index rose 0.4% in September after climbing 0.3% in August. In the 12 months through September, the CPI increased 5.4% after advancing 5.3% year-over-year in August.

Chile’s central bank sharply hiked the country’s benchmark interest rate to 2.75% on Wednesday (vs 2.25% expected) from 1.5% previously, as the Andean country’s economy rebounds strongly from the coronavirus pandemic and the government grapples with high inflation.

Most Asian stocks rose Thursday as traders assessed the durability of the economic recovery to inflationary pressures and a looming reduction in the Federal Reserve’s pandemic-era stimulus.

China's factory-gate prices in September rose at their fastest pace in more than two decades. The producer-price index rose 10.7% from a year earlier in September, accelerating from the 9.5% increase in August, boosted by soaring prices of raw materials. Singapore's central bank unexpectedly tightened monetary policy on Thursday, saying the move would ensure medium-term price stability amid mounting cost pressures caused by supply constraints and the global recovery.

Nifty closed higher for the fifth consecutive session on October 13. In the process it closed above 18000 for the first time ever. At close Nifty was up 0.94% or 170 points to 18162.

Nifty continues the upmove unabatedly and has closed above 18000. Advance decline ratio ended marginally in the positive. Technical indicators on daily charts are close to becoming overbought and hence some correction/ consolidation in the index may be seen over the next 1-2 sessions after an initial upmove seen on Wednesday.

Daily Technical View on Nifty

Upside breakout of 18K mark.. More upside is likely

Observation: After showing range bound movement with positive bias in the last four sessions, Nifty witnessed a sharp upside breakout on Wednesday and closed the day higher by 169 points. After opening on an upside gap of 106 points on Wednesday, Nifty continued its upside momentum with range bound action for the entire session. Minor intraday dips were used as buy on dips opportunity for the day. The opening upside gap remains unfilled.

A reasonable positive candle was formed with gap up opening. Technically, this pattern indicate an upside breakout of crucial overhead resistance at 18K mark. This is positive indication and one may expect follow-through buying in the coming sessions. Daily 14 period RSI has turned up from near 60-65 levels and daily ADX/DMI oscillator shows positive indication. This could mean more scope for upside for the market ahead. Nifty on the weekly time frame chart also indicate chances of an upside breakout of the range movement.

Conclusion: The short term trend of Nifty continues to be positive. Having closed above the hurdle of 18K mark, there is a possibility of further upside in the coming sessions. Next upside levels to be watched around 18400-18500 in the next one week. Immediate support is placed at 18050 levels.

Nifty – Daily Timeframe chart

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