Premarket analysis: 10 July 2020
Emerging markets are holding weekly gains
FIIs bought in cash market & hold net long position in derivatives market
DIIs booked profit yesterday with sizable selling
Virus infections continue to hit all time highs
Global Markets: -Sideways
US and European markets ended in red yesterday but they are still within the consolidation range. Emerging markets ETFs and other assets traded in US were not impacted much and they closed flat yesterday.
High yield bonds, emerging market currencies closed slightly in red. Industrial metals continue to zoom ahead. US Dollar and Japanese Yen strengthened a little. Gold is holding its weekly gains. Volatility index paused in its down ward trend.
ASIAN Markets this morning: - Mixed
Asian markets opened in red this morning and are in sideways coil since then. Chinese markets are consolidating after a stellar raise this week. Most of the emerging markets are holding on to their weekly gains. SGX Nifty is trading about 25 points below Nifty futures' close yesterday.
Forex reserve position and bank lending and deposit data will be released today after market hours.
India: -How safe are the bulls?
FIIs net bought for Rs212 Cr. in cash market yesterday which is a small amount comparatively, while DIIs booked profit with net selling for about Rs.803 Crores. However the index gained more than 1% and ended above 10800. This shows that momentum is positive overall in the markets. FIIs and large proprietary traders are holding net long position in index derivatives market. Nifty and Nifty 500 stock volumes were lower yesterday.
How will Nifty perform today?
Nifty is likely to open flat or negative this morning in line with Asian market sentiment. The daily uptrend is still intact on both Nifty and Bank Nifty. Having risen for 4 consecutive weeks, Nifty may be consolidating for some more time before it decides the next direction. Higher levels may witness some more profit booking
Result season started with TCS announcing its results yesterday. The results missed estimates but company said the deal wins and pipeline offered hope for the future
NIFTY -Technical Bias
Price Action & Technically important levels:
Nifty and Bank nifty recovered nicely yesterday from previous day's sell off. The index seems to have entered a consolidation zone. I expect Nifty to experience profit booking at around 10850 and find good support at around 10450.
Key Index levels are unchanged from yesterday.
Resistance: 10850 /11000
Charts with clear price action:
Bank nifty after forming a shooting star candle day before yesterday, formed a slightly bullish candle yesterday as it opened gap up and continued to stay above the low of shooting star. Bank Nifty breakout is holding so far and may continue to slowly trend towards next Fibonacci levels.
Spreads that will make money within a range of 10500 to 11000 are appropriate