Premarket analysis: 09 July 2020
Emerging markets rally is alive
More signs of economic recovery are visible
Both FIIs & DIIs booked profit yesterday
Virus infections keeps going up
Low expectations on quarterly earnings
Global Markets: -Consolidation
US ended slightly in green while European markets ended in red. Developed markets continue to consolidate near the recent swing tops. On the other hand, risk assets continued to move up. Government bonds of emerging Asia is raising, so are the emerging market ETFs and high yield bonds. Strong performance of Chinese markets continues today that is taking Industrial metals further up. Gold is in strong up trend. Japanese yen consolidated. US dollar fell again. Volatility indices are little changed.
ASIAN Markets this morning: - Mixed
Japanese Nikkei and Korean markets are consolidating near swing tops while Chinese markets are strongly trending upwards. Other markets are mostly in sideways coil. SGX Nifty is trading about 30 points above Nifty futures' close yesterday.
There are no important economic data scheduled for release today.
India: -Is the bull run over?
Both FIIs and DIIs booked profit with sizable selling yesterday at market top. However, that did not send market down much. FIIs are still holding net long position in index derivatives and large proprietary traders are slightly net short in index derivatives. Both NSE and Nifty volumes rose steeply yesterday because of institutional selling.
How will Nifty perform today?
SGX Nifty and Asian markets indicate a flat to positive opening. Nifty’s uptrend is still alive but may pause and consolidate for few days. Large players may continue to test the strength of the rally by booking profits at higher levels.
Q1 FY20-21 result season kicks off with TCS declaring results today. Expectation is that TCS will report revenue ₹38,910.5 crore, down 2.6% from last quarter. Lower earnings for this quarter are largely expected by markets and commentary about forward guidance will be important.
NIFTY -Technical Bias
Price Action & Technically important levels:
Although Nifty and Bank Nifty fell in the last hour of trading yesterday. The uptrend is not threatened yet. The markets may witness profit booking close to yesterday high of 10850 and consolidate in a range today. 10450 continues to be a good support.
Key Index levels are unchanged from yesterday.
Resistance: 10850 /11000
Charts with clear price action:
Bank nifty fell and formed a shooting star candle yesterday. However, it is still above 22500 and hence the break out has not failed yet. Todays price action and follow on candle will be important.
Spreads that will make money within a range of 10500 to 11000 are appropriate