Premarket analysis: 17 July 2020
Global markets are in bullish trend
Risk assets are consolidating gains
Domestic Institutions bought in cash market heavily yesterday
FIIs are still booking profits.
Virus is spreading fast
Global Markets: -Sideways with positive bias
US markets and European markets ended slightly in red. But they are still trading near top of the range. Developed markets are actually trying to break out of the consolidation pattern and move up again. Emerging market ETFs, High yield bonds were consolidating in sideways market yesterday. Copper has paused on its up trend. Safe havens US Dollar and Japanese yen continued to be subdued. Gold fell a little, but it is still holding on to its gains. Volatility indices were steady.
ASIAN Markets this morning: - Mostly in green
Asian markets are trading sideways with small gains this morning. Chinese markets are also rebounding from yesterday’s losses. European and US futures are trading slightly in positive territory in Asia session. SGX Nifty opened in green and trending up since morning. Currently it is trading about 70points above Nifty futures’ close yesterday.
There are no significant economic data release scheduled for today.
India: -Profit booking moderated
Nifty was is sideways coil yesterday for most of the day but rose sharply in the last hour of trading. DIIs stopped their profit booking and bot heavily in cash market. FIIs continued to book profit.
DIIs, FIIs and large proprietary traders continue to be short in the index derivative open interest. However, the short position has sharply narrowed from about 8% of the total open interest to less than a percent yesterday.
How will Nifty perform today?
Nifty continues to coil in sideways market. This week, the range has expanded a little and it is trading between 10550 to 10850. Market is likely to continue to trade within this range today as well. Since Institutions and large players are winding down their short position in futures and options market, the downside may be limited for now.
However today many heavy weights are declaring results. This could cause volatility in the market. Nifty may continue to trend up slowly, assuming that the incoming results do not surprise on the downside
Britannia, HCL Tech, ICICI Lombard Insurance will be declaring results today while banking heavy weight HDFC Bank will be declaring results tomorrow. News flow about results expectations on HDFC Bank today could cause quite a bit of volatility in the markets.
NIFTY -Technical Bias: Negative bias
Nifty price action:
Profit booking seems to be moderating. Today I expect Nifty to trade above the recent lows. Higher levels may still see a moderate amount of profit booking. However, traders need to watch out for short covering spikes and volatility related to result announcements.
Spreads that work in a range bound markets are appropriate till index breaks below 10500/450