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Indian markets could open higher following the gains in the Asian markets today, and gains in the Nasdaq Composite in the US markets on Monday - HDFC Securities

U.S. stocks shook off early losses to finish mostly higher Monday, with buying in consumer discretionary and information technology helping to buttress the broader market, despite a report that revealed slower-thanforecast growth in China that was blamed for early weakness.

In economic reports, a reading of U.S. industrial output was down 1.3% in September. The reading for August was revised lower to a decline of 0.1% from a gain of 0.4%.

India’s domestic air passenger traffic rose 5.4 percent month-on-month in September this year, the Directorate General of Civil Aviation (DGCA) said on October 18. The total passenger load in September stood at 70.66 lakh compared to 67.01 lakh in August, 50.07 lakh in July and 31.13 lakh in June. The passenger traffic in September 2021 was 79 percent higher when compared to the same month in the past year.

Adding to global inflation worries, data on Monday showed New Zealand's consumer price index rose 2.2% in the third quarter, its biggest increase in over a decade. Most Asian stocks rose Tuesday as technology shares rallied and the prospect of solid corporate earnings helped counter concerns stemming from elevated inflation.

Nifty closed higher for the seventh consecutive session on October 18 aided by Metal and IT stocks. This is the longest winning streak from NSE Nifty 50 index since August 31. At close Nifty was up 0.75% or 138 points at 18476.6.

Nifty rose on very high volumes. Advance decline ratio closed in the positive towards the day end but was lower than the morning levels. Nifty is now overbought on daily charts. Tuesday is the eighth day in this uptrend and eight is also a fibonacci number that could denote a change in trend for the near term. 18600 on the Nifty is anyways a resistance while 18350 is a support

Daily Technical View on Nifty

Bulls needs to be cautious at the highs..

Observation: The upmove continued for the 7th consecutive sessions on Monday and Nifty closed the day higher by 138 points amidst minor volatility. New all time high was registered at 18543 levels. A small negative candle was formed at the swing highs with minor upper and lower shadows. Technically, this pattern signal a formation of 'spinning top' type candle pattern. More often, such spinning tops are associated with top reversals. Hence, trading long positions needs to be protected with appropriate stoploss.

The movement of Nifty and 10 day EMA has been correlating in the last 64-64 sessions. Whenever, the gaps between Nifty and 10d EMA has widened, we have seen minor weakness in the underlying from the highs to reduce the gaps and Nifty to reach the support of moving average. Having widened the same gap between Nifty and 10d EMA now, the odds of another round of downward correction from the highs is likely in the short term. Hence, the upper area of 18550-18600 could be a crucial overhead resistance for coming sessions.

Conclusion The short term trend of Nifty remains positive. The overall chart pattern calls for caution for long positions and there is a possibility of another round of short term weakness from the higher levels. The expected weakness could be a buy in dips opportunity for the near term. A sustainable move above 18650 is likely to nullify this negative indication. Immediate support is placed at 18360 levels.

Nifty – Daily Timeframe chart

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