Premarket analysis: 03 July 2020
Global market mood has turned positive on better economic data
Emerging market assets are breaking out of range
FIIs reduced their net sell position yesterday
India- China border situation is dragging on
Virus is still out of control although markets are temporarily ignoring the negatives.
Global Markets: -Positive
US market ended in green within consolidation range while European markets rose more than 2.5% and are breaking out of range. The emerging market equity EFT and currency ETF traded in US broke out of range yesterday. Other risk assets such as high yield bonds rose as well.
Gold, Dollar index and Japanese yen moved sideways. Gold is still holding on to its gain. Volatility index is further cooling off and trending towards long term average.
Upbeat US jobs data, Global manufacturing and economic data seems to have created a positive mood in the markets.
ASIAN Markets this morning: - Green
Asian markets started the day strongly in green. Some of the markets are retracing the gains currently. Asian markets apart from Japanese Nikkei are breaking out of range. Nikkei had already run up quite a bit along with other developed markets and it is currently consolidating at higher levels. SGX Nifty is trading about 50 points higher compared to yesterday’s futures’ close at NSE. Indian Rupee is trading in positive territory in overseas market this morning on top of yesterday’s sharp spike
European and US futures are trading flat this morning in Asia session.
Forex reserve position and Bank deposit, lending data will be released today after market close.
Local economic data as well as positive global mood contributed to break out of Nifty above 10500 yesterday. Decisive break out was sustained through out the day with the help of higher volume in Nifty 50 stocks as well as in Nifty 500 stocks. FIIs sold less than the previous sessions in cash market while DIIs continued to buy.
Markets are not focusing on raising virus infections or India- China border tension at the moment.
How will Nifty perform today?
SGX Nifty and Asian markets indicate that Nifty is likely to open in positive territory today. FIIs having sold considerable amount in cash market for the past week, are likely to moderate their selling or even turn out to be net buyers. Positive momentum in Nifty is likely to continue.
India Bull Housing Finance and Indo Global are scheduled to declare their results today. Edelweiss will declare its results tomorrow.
NIFTY -Technical Bias:
Price Action & Pattern:
Nifty having broken out of 10500 decisively, is most likely to move towards 10720. A good support exists at 10200.
Charts with clear price action:
Bank nifty has been lagging behind Nifty so far. A break out of ascending triangle could push it towards 25K and make it even with Nifty.
Bullish spreads are appropriate but entering the spread at higher levels may not be beneficial.