Premarket analysis: 29 June 2020
Expectation of Chinese stimulus helping industrial metals
DIIs supported markets on Friday.
Risk off mood is taking hold in global markets
FIIs booked profit on Friday.
Virus infections are hitting record high in emerging and in developed markets
Market consensus is leaning towards longer and stronger recession
Global Markets: -Risk Off mood
US and European markets saw a sharp sell off again on Friday. The weekly candle of US Dow jones was bearish while many other markets formed an indecisive doji candle. Most of the risk assets are falling and safe haven assets lead by Gold are trending higher. Copper is trending higher as well on expectations of Chinese stimulus. Volatility index in US rose on Friday.
ASIAN Markets this morning: - Still Consolidating
Asian markets opened lower this morning and are currently slightly rebounding from the lows. Markets seem to expect that last week’s risk off mood may continue this week. European and US futures are re- bounding slightly after Fridays sell off. SGX Nifty is trading is around 100 below comparted to Nifty’s Friday close.
Fiscal deficit and infrastructure output numbers will be released tomorrow
India: -Consolidation or breakdown?
FIIs net sold on Friday while DIIs supported the markets with larger net buy position in cash markets. NSE turnover was lower and advance decline ratio was slightly positive.
How will Nifty perform today?
Nifty is likely to open gap down today after two days of consolidation and in line with Asian market mood. Weekly candles on both Nifty and Bank nifty was an indecisive doji candle right at recent swing tops. Therefore, it could either be a continuation or reversal doji. This makes today’s price action important as it might show the immediate direction for next couple of days. My feeling is that global risk off mood could affect Nifty and take it towards 10k.
There are no heavy weights declaring results today.
NIFTY -Technical Bias:
Price Action & Pattern:
Nifty price action after today’s gap down opening is crucial. Break down below 10180 could take the index towards 10k. That will also form a bearish continuation daily candle from last week’s doji candle. If Nifty holds 10180 by EOD, it could probably mean consolidation for couple of more days.
Holders of bearish spreads may hold it and see the price action around 1080/200. Pull backs could be used to go short.