Premarket analysis: 24 July 2020
Asian emerging market currencies are gaining
Economic recovery hopes are still alive
Hopes on vaccine
Global equity indices are beginning to pull back
Good news seems to have been priced in already
Tension between China and US are boiling over.
Global Markets: -Pulling back
European and US markets ended in red. They seem to be pulling back from consolidation range near top. Markets are growing un easy on China and US tensions getting out of control. This suggests profit booking could gather pace.
Risk assets: Most of the risk assets ended in red yesterday. Emerging market equity and industrial metals such as copper, Asian emerging market government bonds ended in red. High yield bonds index and Emerging market currencies from Asia were the exception and they continued to go higher.
Safe heaven assets: US Dollar index is crashing and broke down from strong support at 95. Japanese yen against dollar rose a bit. Gold continues to push higher on dollar weakness.. Volatility indices paused from falling.
ASIA this morning: - Mostly in Red
Profit booking is gathering pace in Asian markets as well this morning. Most of the Asian equity indices are trading in red. The European and US equities are in red as well. SGX Nifty is trading in red by about 50 points compared SGX Nifty close yesterday.
Forex reserve position and bank loan data will be released by RBI aftermarket hours today.
Asian paints, Ambuja cement, Chennai petroleum and Crompton are some the companies that will release their results today.
India: - Will profit booking gather pace?
FIIs and DIIs continue to have opposed views on the market. DIIs have not stopped selling in cash market. The continue to hold short position in stock and index derivatives segment. On the other hand, FIIs were net buyers in cash market for a while and continue to hold long position in index derivatives market. Large proprietary traders are holding short position as well in derivatives market.
How will Nifty perform today?
In line with global market direction, FIIs may moderate their buying the cash market. This could send index down as DIIs may continue to book profit. Market momentum is exhausted and it is likely to follow the global markets. Nifty may pull back towards 10900/850. A strong support exists at 10750. Today there seems to be no threat of this level being broken.
NIFTY -Technical Bias: Sideways
Nifty price action:
Fibonacci level 11200 is offering some resistance on upside. Recent high of yesterday 11240 is likely to hold today. The consolidation in nifty could be in the range of 10900 to 10250.
The support and resistance levels remain same as yesterday’s
Support: 10850. Strong support at 10750
Spreads that will benefit from the above range are appropriate