Positives:
Global markets are consolidating close to recent swing tops
FIIs bought in the cash market on Friday
Markets rose on Friday supported by heavy volumes
Negatives:
No solution for India-China border stand-off and uncertainty continues
Global market discussions are turning towards caution and second wave of virus
Global Markets: -Consolidation close to swing top
European markets ended in positive territory on Friday while US markets ended in red. They are still consolidating close to the recent swing tops. Safe haven assets USD and Japanese yen rose and are holding their gains. Gold is up this morning. The risk assets such as emerging market currencies and equities are in sideways consolidation phase.
ASIAN Markets this morning: - Consolidation
Asian markets opened the week in negative territory. Although markets have recovered slightly since opening, they are trading in sideways and mood is cautious. European futures are trading in red while US futures have recovered from morning lows. SGX nifty after recovering from Friday night lows, is trading about 50 points below Nifty’s yesterday close.
Calendar Events:
There are no major regular economic data to be released today
India: Up move with heavy volumes
Nifty 50 and broader markets went up on Friday with heavy volumes after a strong up move on Thursday. Advance decline for NSE stocks were 2.27. FIIs net bought Rs.1237 Cr in the cash market while DIIs booked profit for about 880 Cr. The reliance industries' 6+% spike helped the overall mood and volumes in the market. Nifty is comfortably placed above 10K.
How will Nifty perform today?
Nifty is still with in its recent swing highs and moving within the bull channel. High volume both in Nifty 50 heavy weights and broader Nifty 500 shows there is a good retail support as well. However, the global news flow suggest that the institutional investors are turning cautious. Therefore, the higher volume at swing tops could also be due to “distribution” / profit booking by institutional investors. I expect Nifty to be range bound and higher levels are used to book profits.
Result announcement:
There are no heavy weights declaring results today.
NIFTY -Technical Bias:
Price Action & Pattern:
Nifty continued to go up for second day on Friday with FIIs support and heavy volumes. However, with global mood is turning cautious. Chances are that either DII or FII may start booking profits at higher levels that should keep the Nifty in range between recent swing top and 10k. Psychological level of 10K seems to be a good support at the moment. However, if 10320 level is broken decisively intraday, Nifty could march towards the bull channel top of 10500.
Therefore, I expect markets to trade sideways within the range of 10320 to 10000 today while bullish news flow could push it towards 10500.
Trade Ideas:
Spreads benefiting from sideways market are appropriate, however spread traders need to watch out of decisive break above 10500 or below 10K and adjust the legs accordingly.
