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Indian markets could open mildly higher following rangebound and mixed Asian markets today, and despite gains in the Dow 30 index in US markets on Wednesday  - HDFC Securities

The S&P 500 index and Dow industrials ended higher Wednesday, knocking on the door of all-time records, as investors parsed the Federal Reserve’s latest Beige Book showing the U.S. economy is growing at a modest to moderate pace, but remains under pressure from inflation and labor shortages. Upbeat corporate earnings also continued to fuel bullishness in stocks, with electricvehicle maker Tesla Inc. reporting after the market closed. The yield-sensitive Nasdaq Composite gave up earlier gains though, after attempting to advance for a sixth straight gain, pressured lower by the benchmark 10-year Treasury yield climbing above 1.6%, even as corporate earnings for the third quarter continue to delight investors.

Bitcoin soared over $66,000, notching a fresh high for the cryptocurrency.

Asian stocks were mixed early Thursday as investors weighed corporate earnings, elevated inflation and risks from China’s property sector.

Nifty fell for the second day in a row on Oct 20 as profit taking across the board led to Indian markets being the worst performer in the Asian region once again. Nifty finally closed 0.83% or 152 points lower at 18267. Nifty closed at almost the intra day low for the second session and advance decline ratio continued to be sharply negative. 18198 and 17948 are the two successive supports for the Nifty while, 18351 could be a resistance for the near term. Post 1-2 days of more weakness, one may get a chance to bottom fish (especially for traders).

Daily Technical View on Nifty

Short term top reversal… More weakness is likely

Observation: After showing weakness from all time highs on Tuesday, Nifty witnessed follow-through declines on Wednesday and closed the day lower by 152 points.

A long bear candle was formed on the daily chart, which indicate sharp reversal in the market. The recent swing high of 18604 could now be considered as a short term top formation for the Nifty. In the last two months, the market has been in a strong up trended move and the downward corrections in between was smaller and is limited up to 2-3 sessions. As per this pattern, the two sessions of weakness is already over from the highs and there is a possibility of an upside bounce emerging from the lows in the next 1-2 sessions.

The correlation of Nifty and 10 day EMA is intact as per daily timeframe chart. The last two sessions downward correction from the highs have narrowed the gap between Nifty and this moving average. As happened in the past for several times, the Nifty could slide down to the support of 10d EMA (currently at 18150) in the next 1-2 sessions before showing any sustainable upside bounce.

Conclusion: The short term trend of Nifty continues to be negative and there is a possibility of some more weakness in the next 1-2 sessions before showing any convincing upside bounce from the lows. Important lower support is placed around 18150-18100 levels.

Nifty – Daily Timeframe chart

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