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

U.S. stock benchmarks finished at, or near, record highs Monday, ahead of a heavy slate of earnings for the week. Investors are counting on the prospects of slowing growth to keep the Federal Reserve from tightening monetary policy by too much down the road.

Most Asian stocks rose Tuesday after a record S&P 500 close as corporate earnings and progress on President Joe Biden’s economic agenda helped sentiment even as the debate over inflation risks intensified.

Nifty broke a 4 day losing streak and ended marginally in the positive on October 25 helped by Banks. At close, Nifty was up 0.06% or 10.5 points at 18125.4.

Nifty recovered well from the morning weakness. In the process it made a lower intra day low compared to the previous session but closed higher. It turned up from the low of 17968 – close to the support level of 17948. Selling pressure in some index heavyweights is counterbalanced by buying in some other sectors. However the broader market continues to flounder and the advance decline ratio is deeply in the negative. Nifty has a chance to stabilize and bounce up though a broader market recovery seems a couple of days away.

Daily Technical View on Nifty

Placed at the support.. But, no sign of reversal.

Observation: After showing weakness in the last four sessions, Nifty showed high volatility on Monday and closed the day higher by 10 points. A small negative candle was formed with lower shadow on the daily chart, beside the similar candle of Friday. Technically, this pattern indicate a range bound action with minor upside recovery from the lows. This is not a convincing attempt by bulls to make a comeback.

The crucial lower support of 10day EMA has been broken marginally on the lower side at 18143 and the market showed upside recovery from another important support of 20 day EMA around 17980 levels. As long as this later support 20d EMA holds, there is a higher possibility of an upside bounce emerging in the market. The positive chart pattern of higher tops and bottoms is intact on the daily chart and Monday's swing low of 17968 could be considered as a new higher bottom of the sequence. But, we need confirmation of upmove in the subsequent session to call this as a higher bottom reversal.

Conclusion: The short term trend of Nifty is range bound with minor positive bias. Having slowed down of downside momentum and placed at the crucial supports, one may expect chances of upside bounce from the lower levels. Any failure to sustain the upside bounce or a decisive move below 17950-17900 levels could extend sharp weakness for the short term. A confirmation of upside reversal by positive close could open an upside bounce in the market.

Nifty – Daily Timeframe chart

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