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Indian markets could open flat in line with rangebound Asian markets today and largely unchanged US markets on Wednesday - HDFC Securities

US stocks closed mostly higher Wednesday after investors decided to buy the dip before taking a break for Thanksgiving. The uptick came from economic data forcing the market to reflect higher expectations that the Federal Reserve will reduce support from both the market and the economy.

The release of minutes of the Federal Reserve’s November meeting showed some officials favored a faster pace of tapering of the central bank’s monthly bond-buying program. U.S. markets will be closed on Thursday for Thanksgiving and will end early on the Friday after the holiday.

Personal spending also rose 1.3% month-over-month in October, higher than the expected 1% rise. Durable goods orders fell 0.5% month-over-month in October, worse than the consensus economist forecast of a 0.3% rise. PCE (Personal Consumption expenditure) rose 0.6% over month in October and 5% over the year. The Core Personal Consumption Expenditures Index, a key inflation measure the Fed tracks, rose 4.1% year-over-year in October, in line with estimates and higher than the previous reading of 3.7%.

Jobless claims fell to 199,000, the lowest level for initial claims since Nov. 15, 1969, according to the Labor Department, and far better than the expected 260,000. The drop extends a trend of strength in the labor market. The pace of economic growth in the third quarter was raised to a 2.1% annualized rate versus an initial estimate of 2%. The U.S. trade deficit in goods narrowed sharply in October. The University of Michigan’s gauge of consumer sentiment rebounded to a final November reading of 67.4 from an initial reading of 66.8, but below the October reading of 71.7.

The Biden administration added a dozen Chinese companies to its trade blacklist on Wednesday, citing national security as well as foreign policy concerns. The Bank of Korea raised its policy rate by 25 basis points to 1%, a move that was largely expected by analysts in a Reuters poll. Asian stocks were rangebound Thursday as traders weighed Federal Reserve minutes that flagged the risk of a faster reduction in stimulus to fight elevated inflation.

Nifty gave up the early gains and ended in the negative on Nov 24 after a volatile trade. At close Nifty was down 0.50% or 88.3 points at 17415. Nifty fell for the fifth day out of the past 6 sessions. Nifty reversed the gains of the previous day displaying that the bounce so far is feeble. Advance decline ratio however ended in the positive. Nifty turned back from 17600 levels. Now 17280 could be a crucial support to track while 17613 continues to the resistance.

Daily Technical View on Nifty

Market: Observation

Markets corrected sharply on Wednesday after a gap up opening. The Nifty finally lost 88.3 points or 0.5% to close at 17,415.05. Broad market indices like the BSE Small Cap index gained, thereby out performing the Sensex/Nifty. Market breadth was positive on the BSE/ NSE.

Nifty: 60 min chart indicates downtrend intact

* Zooming into the 60 minute chart, we can see that the Nifty opened with an upgap and was in positive territory till 1.30 PM when selling emerged and pulled the index sharply lower.

* Index has thereby resumed short term downtrend after bounce back seen on Monday. Also on the 60 min chart, the 20 period MA continues to remain below the 50 period MA. 

* short term bounces are possible, we expect the downtrend to continue. Immediate downsides are at 17216.

Nifty: Daily chart indicates more weakness

* On the daily chart, we can see that the Nifty remains in a downtrend despite the bounce back seen on Tuesday. The 20 day SMA is also sloping down and on the verge of crossing below the 50 day SMA. Weekly momentum readings like the 14-week RSI are in decline mode.

* While we remain open to pullback rallies, we expect the Nifty to eventually move lower in the coming sessions. A larger correction is likely once the 17216 supports are broken.

Nifty – Daily Timeframe chart

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