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Indian markets could open mildly higher in line with most Asian markets today and despite mildly negative US markets on Friday - HDFC Securities

Major U.S. stock indexes closed lower Friday, as risk appetite waned on New Year’s Eve, but the S&P 500, Dow Jones Industrial Average and Nasdaq Composite all closed out the month, quarter and year with gains despite the pandemic. The S&P 500’s performance in 2021 lands in the top fifth of years dating back to 1927, with the Dow placing in the top third of years as far back as 1896.

WTI crude rose more than 55% in 2021, its largely annual gain in 12 years. Gold fell 3.6% in 2021. 2021 has been a low volatility, high return year for the S&P 500. This is reminiscent of 2013 and 2017. Looking forward to 2022 (like 2014 and 2018) we expect volatility to pick up. The defining characteristic of markets in 2021 for me was the incredible resilience of corporate earnings. Emerging market stocks broke a two-year winning run, but were set to end the last day of 2021 on a positive note on Friday boosted by China shares, while Turkey's lira seesawed in thin trade after hefty losses this week. MSCI's index of EM shares rose 0.8% to three-week highs as China blue-chips climbed 0.4%, while battered Hong Kong shares jumped 1.2%. On the year, however, the Chinese indexes lost as a regulatory crackdown in the country had hammered heavyweight technology, internet and gaming stocks, while debt default risks at heavily indebted real estate developer China Evergrande Group hurt the property sector.The broader EM index was on track to close about 4.5% lower on the year, compared with a more than 25% rise in the U.S. benchmark S&P 500.

The Union government’s fiscal deficit was down 35.3% year-on-year at Rs 6.96 lakh crore in April-November 2021, accounting for 46.2% of the Budget estimate for the current financial year, as tax collections remained robust and spending muted. The fiscal deficit was at 135.1 percent of the Budget target in the first eight months of FY21. Total receipts up 66.0 percent in April-November, on the back of robust tax collections. Total expenditure, meanwhile, was up only 8.8% over the same period.

India's output for eight core sectors grew by 3.1 percent in November 2021, data released by the Ministry of Commerce on December 31 said. According to the Ministry, the production of coal, natural gas, refinery products, fertilisers, steel and electricity industries in November 2021 increased on a year-on-year basis. The output of the remaining two, crude oil and cement, contracted by 2.2% and 3.2%, respectively. Earlier in October 2021, the output for eight core sectors had grown by 7.5 percent. Coal production rose by 8.2 percent, natural gas by 23.7 percent, refinery products by 4.3 percent, fertilisers by 2.5 percent, steel by 0.8 percent, and electricity by 1.5 percent in November 2021.

The current account deficit in July-September 2021 was $9.6 billion as against a surplus of $6.6 billion in April-June 2021. In July-September 2020, the current account surplus was even larger at $15.3 billion. In Q2FY22, India's merchandise trade deficit widened to $44.4 billion from $30.7 billion the previous quarter because of a 16.5 percent increase in imports to $149.3 billion.

South Korea's exports expanded at their fastest pace in 11 years in 2021, with the total export value reaching a record high, supported by post-pandemic recoveries in global demand. For the full year, exports rose 25.8% from a year earlier to $644.54 billion.

India’s goods and service tax revenue collection stayed above Rs 1 lakh crore for the sixth straight month. GST revenue for November, collected in December, stood at Rs 1,29,780 crore. That's 13% higher than a year ago and 26% greater than revenue in pre-pandemic December 2019, but 1.3% lower than the previous month.

Shares in Asia rose in Monday morning trade, as trading in 2022 kicked off on a positive note. Some major markets in the region (China, Australia and Japan) are closed. After two days of sideways close, Nifty rose on Dec 31, the last day of calendar 2021. At close, Nifty was up 0.87% or 150 points at 17354.

Nifty ended the year 2021 with hefty gains of 24.1%, the best gain in 4 years. For the week too it gained a healthy 2.06%. Nifty has risen 6.4% from the recent bottom. Now onwards the rise will be slower in the new year when all players will return to their trading desks. 17161 is a support in the near term while 17405-17534 band could provide resistance.

Daily Technical View on Nifty

Observations

* Last Week, Nifty rose for the second consecutive week by gaining more than 2%. From the recent swing low 16410, Nifty has shown a recovery of 990 odd points towards 17400.

* During the recent recovery, Nifty has managed to surpass the crucial resistances of 50 days EMA and 100 days EMA, currently placed at 17337 and 17150 respectively

* On 31st December 2021, Nifty broke out from the 50 days EMA as well as the narrow consolidation which held for previous 3 trading session. Daily and Weekly close of the remained very strong, as Nifty managed close very near to the highest levels of the recent upswing.

* Short Term Indicators and oscillators like DMI, RSI and MACD have been showing strength in the uptrend of Nifty.

* Looking at the short term trend, we could easily say that Nifty is on the path of recovery, as in the recent upswing Nifty has reclaimed a level above 10,20,50 and 100 days EMA. The long term support of 200 days EMA was never violated during the fall seen from 18604 to 16410 in the Nifty

* However, intermediate trend of the Nifty is still down, as it has been forming lower tops and lower bottoms on the weekly charts. Previous swing high was seen at 17640 and Nifty is yet to surpass that level.

* If we were to take entire downswing from 18640(Top of 19 Oct 2021) to 16410(Bottom of 20 Dec 2021), 50% and 61.8% Fibonacci retracements comes in at 17507 and 17766 respectively.

* Immediate support for the Nifty is seen at 17100 odd levels, While far support is seen at 16800

Nifty – Daily Timeframe chart

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