Premarket analysis: 02 July 2020
Asian markets and emerging market assets are in green
Global and India’s Purchasing manager’s Index was better than expected
FIIs net selling in cash market continues
Global markets are still within consolidation range
Global Markets: -Sideways coil
US and European markets ended slightly in red in a sideways market. However, risk assets such as High yield bonds, Emerging market assets gained. US dollar and Gold fell from the highs while Japanese yen was flat. All the asset classes are still trading within sideways range. Only gold had broken out of range. Volatility index both in India and in US are trending down.
Global manufacturing Purchasing managers index rose to 47.8. The global economy although is still shrinking, its speed of contraction has slowed with opening up of economies amid virus pandemic.
ASIAN Markets this morning: - Green
Asian markets started the day in green. They are still within the consolidation range. SGX Nifty is trading about 60 points above compared yesterday’s July futures’ close at NSE.
India’s purchasing manager’s index came in at 47.2 which was better than expected. The previous reading was 30.8. Any reading above 50 will mean economy is starting to grow.
There are no other important data release scheduled for today.
GST collection and PMI for the month of June are hinting at better than expected economic recovery. End of lockdown measures seem to help economy to recover quickly. However, the virus infections have started growing fast and job losses continue to mount. Hence full recovery may be still far away.
How will Nifty perform today?
SGX Nifty indicates a positive open for markets today. FIIs are still net sellers in cash market and DIIs are absorbing the sales adequately. The advance-decline ratio was positive for NSE and Nifty 50 volume was higher yesterday.
India Bull Housing Finance and Indo Global are scheduled to declare their results today.
NIFTY -Technical Bias:
Price Action & Pattern:
Nifty attempted to re test 10500 and breakout yesterday. Positive mood on emerging market assets is helping Indian markets. Therefore, Nifty is likely to test 10500 today and could reverse from there due to profit booking. Break out above 10500 will be bullish and Index may move towards the wedge top of 10600. Weekly expiry trading may cause more volatility today
Charts with clear price action:
Nifty and Bank Nifty heavy weight HDFC Bank has move up and is right at the top of the wedge. Today’s price action may determine the expiry day direction and volatility.
Traders need to wait for price action at around 10500 and decide the trade.