Premarket analysis: 08 July 2020
Emerging markets rally is intact
FIIs bought in cash market & are net long in F&O
Surging virus infections
Low expectations on quarterly earnings
Global Markets: -Sideways
US and European markets ended in red. They were unable to break out of the consolidation range. Risk assets are such as emerging market ETFs, high yield bonds are doing better. Yesterday they mostly consolidated in sideways market. Industrial metals continue to rally on the back of strong performance of Chinese stocks. Gold is up again. Japanese yen and dollar coiled sideways. US Volatility index paused on its downward trend.
ASIAN Markets this morning: - Mixed
Most of the Asian markets opened slightly in red and are in sideways curl since then. European and US futures are trading flat as well in Asian session. SGX Nifty is trading about 20 points above Nifty futures' close yesterday.
Cabinet meeting is scheduled by 10.30 AM today which I assume is likely to discuss and take decisions on economic issues.
India: -Will it go any further?
FIIs have turned net buyers in cash market and continue to hold net long position in index derivatives for second day. Large proprietary traders were also net long in index derivatives. DIIs booked some profit yesterday. Optimism in the markets seems to be intact.
How will Nifty perform today?
SGX Nifty and Asian markets indicate a flat opening. Emerging markets seems to be catching up with developed markets that has run up already . Both Nifty followed by Bank Nifty have broken out of their consolidation ranges. Hence Nifty is unlikely to break its uptrend immediately. Bank Nifty needs to hold above 22500 for couple of days at least.
There are no heavy weights declaring results today. Only Dish TV & South Indian bank are the notable names that will declare their results
NIFTY -Technical Bias
Price Action & Technically important levels:
Nifty and Bank Nifty has broken out of ranges. Fibonacci replacement is a good indicator to find support/ resistance. Therefore, I expect 10450 to act as a good support. The index may continue to move in a slow upward trend towards 10850 and then towards 11250.
Resistance: 10850 /11000
Charts with clear price action:
Bank nifty has finally broken out of range and if it manages to hold above 22500, it could further move up towards next Fibonacci level of 23850.
Continuation of bullish spreads are appropriate. There is a good opportunity to do spreads that will make money with in a range of 10500 to 11200