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Indian markets could open flat to mildly higher in line with mixed Asian markets today and despite higher US markets on Monday -  HDFC Securities

The Dow Jones Industrial Average and S&P 500 Index swept to record closes on Monday, driven by optimistic investors during the first day of trading in 2022, while joining the Nasdaq Composite in posting the biggest gains in a week. Financial markets were reflecting broad optimism that the economy can weather omicron, as well as rate hikes from the Fed. Bond yields jumped to start the year with the 10-year Treasury yield topping 1.63%.

December, 2021 also saw the highest ever level of monthly outbound trade for India at $37 billion. Exports in December, 2021 saw 37 percent growth over December 2020 and an increase of 37.5 percent over December 2019. Exports reached a cumulative $299.74 billion in April-December of FY22, an increase of 48.8 percent over the April-December period of FY21 and an increase of 25.8 percent over FY20. India's trade deficit widened to $21.99 billion. India's merchandise import in December 2021 rose to $59.27 billion, an increase of 38.06 per cent over $42.93 billion in December 2020. During April-December 2021 period the total import rose to $443.71 billion, an increase of 69.27 per cent over $262.13 billion recorded in the corresponding period of 2020. The trade deficit in December 2021 was $21.99 billion, while it was $143.97 billion during April-December 2021.

China's factory activity grew at its fastest pace in six months in December, driven by production hikes and easing price pressures, but a weaker job market and business confidence added uncertainty. The Caixin/Markit Manufacturing Purchasing Managers' Index (PMI) rose to 50.9 in December - its highest level since June. Asian stocks mostly rose at the open Tuesday after the S&P 500 closed at a record high on the first trading day of 2022

Nifty began the new calendar year on a positive note on Jan 03. Nifty scored the biggest single day point gain in almost three weeks. At close Nifty was up 1.57% or 271.6 points at 17625.7. In the process, Nifty was the top performer in the Asian region. Nifty has reached a key resistance level in the sharp upmove seen lately. 17697-17758 could be a key resistance area for Nifty while 17379 is a key support. Daily technical indicators are overbought and may need cooling down by consolidation/correction.

Daily Technical View on Nifty

Sharp upside breakout of the hurdle

Observation: After the upside breakout of the hurdle of down sloping trend line at 17250 on Friday, Nifty witnessed sharp upmove on Monday and closed the day with hefty gains of 271 points. After opening with a positive note, the market has started with upside momentum after opening. The gradual upmove continued for better part and the upmove got strengthened in the later part of the session. A long bull candle was formed on the daily chart post upside breakout of the crucial overhead resistance of down trend line on Friday. This is an indication of sharp comeback of bulls and this display strengthening of upside momentum in the market. This is positive indication and one may expect further upside in the short term.

The negative sequence of lower tops and bottoms on the daily chart is now placed at the edge of negation, as Nifty moved above the last lower top of 13th Dec at 17639 levels on Monday. This could mean that the bearish set up is likely to be negated and any dips from here could unfold a bullish set up like higher highs and lows, as per daily chart.

Conclusion: The upside momentum in the market has strengthened by the way of sharp upside breakout of strong resistance of down trend line. This could signal overall change in trend at the lower timeframe charts and indicate more upside for the short term. Immediate support is placed at 17500 levels and the next upside targets to be watched around 17900- 18000 levels.

Nifty – Daily Timeframe chart

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