IGI Logo

Indian markets could open flat following largely positive Asian markets today and despite mixed US markets on Thursday and Friday.- HDFC Securities

U.S. stock indexes closed mostly at records in a choppy Thursday session, buoyed by upbeat earnings from chip company Nvidia Inc. and major retailers, while concerns about a seasonal rise in COVID-19 cases in Europe & US were seen capping gains. It wasn’t all good news on the earnings front, however, with the Dow Jones Industrial Average weighed down by a steep loss for Cisco Systems Inc. The Philadelphia Federal Reserve Bank’s manufacturing index jumped in November to 39 from 23.8. While the Conference Board’s Leading Economic Index jumped 0.9% in October and pointed toward a pickup in growth toward the end of 2021.

Turkey's lira shed another 3.3% to above 11 per dollar after the central bank cut rates by 100 basis points to 15%, even in the face of inflation near 20% and the Turkish currency hurtling southward.

Highly indebted property developer China Evergrande will likely default because the company has essentially lost its main business, S&P Global Ratings analysts said in a report Thursday. Evergrande was China’s secondlargest developer by sales last year. Like many Chinese developers, the company sold apartments to consumers before completion, helping to generate capital for future projects. But that cash flow cycle is running into problems. Despite the company’s ability to sell assets and find ways to make payments in time, “Evergrande’s massive debt will catch up with it,” the S&P report said. “The firm has lost the capacity to sell new homes, which means its main business model is effectively defunct. This makes full repayment of its debts unlikely,” the analysts said.

India's economic advisory council to Prime Minister Narendra Modi expects the country's growth to range between 7% and 7.5% in the next fiscal year and that the next budget should have a clear roadmap for privatising state-owned assets. The government expects the economy to grow 10.5% in the current fiscal year following a record contraction of 7.3% last year.

U.S. stock indexes ended mixed Friday, with the Dow Jones Industrial Average sliding amid growing concerns over rising cases of COVID-19 in the U.S. and Europe, but the technology-laden Nasdaq Composite ended at a record high as bond yields fell. The Nasdaq Composite Index closed above 16,000 points for the first time on Friday. An announcement of a 20-day nationwide COVID lockdown by the Austrian government spooked stock markets and sparked buying in government safe-haven bonds on Friday. The real yield on 10-year U.S. Treasury inflation-protected securities, or TIPS, hit an all-time low of -1.196%, based on data going back to 2003, on Nov. 9 and hasn’t moved far off that level since, according to Tradeweb, ending Friday at -1.136%.

China on Monday kept the one-year Loan Prime Rate (LPR) unchanged at 3.85%. The five-year LPR was also left steady at 4.65%. Asian Stocks were largely in the positive Monday amid concerns about European Covid curbs and the risk of a quicker withdrawal of Federal Reserve stimulus. Nifty ended lower for the third consecutive session on November 18. At close the Nifty was down 0.75% or 134 points at 17765. For the week the Nifty is down 1.87%.

Nifty fell for the third consecutive session. In the process the Nifty logged a first weekly loss in three weeks. While equities still remain attractive due to negative real interest rates, a high equity risk premium and flows looking for real returns, the chart formation over the last few days suggest some more weakness before any reversal is seen. If the support of 17613 is breached, this downmove can accelerate.

Daily Technical View on Nifty

Trend reversal on the downside

Observation: The sharp downside momentum continued in the market on Thursday and the Nifty slipped into decline by 133 points with high volatility. A long negative candle was formed on the daily chart with upper and lower shadow. This reflects an extent of decline with high volatility on the day of weekly F&O expiry of Thursday. Nifty is now placed at the edge of the support of ascending trend line at 17750, which is connected through previous swing lows. This is not a good sign and this indicate chances of downside breakout of trend line support in the short term.

Nifty on the weekly chart has reversed down sharply after a minor upside bounce of the last two weeks. Nifty is currently placed at the crucial support of 10 week EMA at 17720 levels and there is no sign of any sustainable upside recovery attempt from the support. The said weekly moving average was instrumental for offering support and resulting in significant upside bounces for the Nifty in the past. Hence. a decisive move below 17700-17600 could be considered as an important trend reversal in the market as per smaller and larger timeframe charts

Conclusion: The short term trend of Nifty continues to be weak. The overall negative chart pattern signal possible downside breakout of key support around 17700-17600 levels and that could open a larger downward correction down to 17200-17100 levels in the next few weeks. Any attempt of upside bounce could find resistance around 17850-17950 levels.

Nifty – Daily Timeframe chart

To Read Complete Report & Disclaimer Click Here

Please refer disclaimer at https://www.hdfcsec.com/article/disclaimer-1795

SEBI Registration number is INZ000171337

Views express by all participants are for information & academic purpose only. Kindly read disclaimer before referring below views. Click Here For Disclaimer