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Indian markets could open flat to mildly higher following largely positive Asian markets today, and positive US markets on Monday  - HDFC Securities

All three U.S. major stock-market indexes closed at records on Monday amid a strong third-quarters earning season for many companies, ahead of this week’s pivotal Federal Reserve meeting. According to Credit Suisse, earnings by S&P 500 companies have beaten estimates by 10% in the third quarter.

The Fed will announce its latest monetary policy decision on Wednesday, with expectations it will finally announce the tapering of asset purchases. Traders will be closely scrutinizing the commentary around its latest actions.

A closely-followed gauge of U.S.-based manufacturing activity (ISM) inched lower to 60.8% in October from 61.1% in the prior month. And the IHS Markit final purchasing managers index reading for October fell to 58.4 versus an initial estimate of 59.2.

Commodities stabilized with a further drop in Chinese coal prices pushing them 50% below last month's record high. Oil prices rose on Tuesday as key producer group OPEC undershot its expected pace of output increases last month, while the world’s top oil consumer China ramped up operating rates to meet a spike in diesel demand. OPEC+, stuck to gradual, monthly production increases of 400,000 barrels per day (bpd), despite calls for more oil from major consumers.

Malaysia stocks fell on Monday as the government announced a one-off “windfall” tax on companies to raise revenue for the coming year to fund the largest ever spending plan

India trade deficit fell marginally in October as exports picked up while imports eased. Trade deficit stood at $19.9 billion in October compared to $22.6 billion in September. The monthly deficit in September was at an all-time high. Exports rose to $35.47 billion in October, a 5% rise on a monthly basis and 42.3% annual increase. Imports fell 1.8% month-on-month to $55.37 billion. On an annual basis, it increased 62.5%. Asian stocks opened steady Tuesday as traders evaluated a record-high close for U.S. equities and awaited key central bank decisions amid concerns about elevated inflation.

Nifty closed up on Nov 01 after a three day losing streak. At close, Nifty was up1.46% or 258 points to 17929.6. In the process it registered the biggest one day gain in almost 5 weeks. Advance decline ratio was sharply up. FPI selling seems to have waned on Nov 01. Nifty has smartly bounced up taking even the broader markets higher. 18033-18098 is the next band of resistance while 17799 is the support.

Daily Technical View on Nifty

Market: Observation

Markets ended with hefty gains on Monday. The Nifty bounced back sharply after 3 sessions of losses. The Nifty finally gained 258 points or 1.46% to close at 17,929.65. Broad market indices like the BSE Mid Cap index gained more, thereby out performing the Sensex/Nifty. Market breadth was positive on the BSE/NSE.

Nifty: 15 min charts showing a trend reversal

* Zooming into the 15 minute chart, we can see that the Nifty opened on a positive note and began moving higher after finding support at the 20 period MA.

* We also observe a MA crossover on the 15 min charts as the 20 period MA has moved above the 50 period MA.

* This indicates that the bulls are having a upper hand for the near term. We therefore expect the Nifty to move up further in the very near term.

Nifty: 50 day SMA providing support

* On the daily chart, we observe that Nifty has bounced back just above the 50 day SMA. Being a crucial moving average support, it indicates that the bulls are trying to make a comeback.

* Upside acceleration is likely once the Nifty moves above the 20 day SMA currently at 18041. In this scenario, the Nifty could attempt to test the previous highs of 18384. Crucial supports to watch for resumption of weakness are at 17697-17593.

Nifty – Daily Timeframe chart

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