The Indian equity market is likely to open in the green on Wednesday following gains in Asian peers after an overnight rally on Wall Street.
Asian markets traded higher ahead of the release of China’s industrial profits for May, while the rally in US stocks was fuelled by upbeat economic data.
The trends on SGX Nifty also indicate a strong start for the broader index in India. The Nifty futures were trading 50 points, or 0.27%, higher at 18,861 on the Singaporean Exchange.
Investors will react to the macroeconomic data released late Tuesday. India’s current account deficit (CAD) decreased to $1.3 billion, 0.2% of GDP in Q4FY23. Net foreign direct investment (FDI) recorded a robust sequential rise to $6.4 billion in Q4 from $2.0 billion in Q3.
Also Read: SGX Nifty to US stocks rally: Check out key global cues for Indian stock market
The Indian benchmark indices posted a strong rally on Tuesday led by gains in financial and banking heavyweights with the Nifty ending above 18,800 level. Bulls came back with vengeance in Bank Nifty, which broke out from the crucial resistance of 44,000-44,100 and closed above it.
“Compared to a very narrow up move in US indices (only 8 stocks out of S&P 500 are responsible for the bulk of the gain in S&P 500 index), Indian markets are witnessing a broad-based rally. Percentage of stocks above 200 DMA reached above 75% in the current rally which was higher than the reading of 68% in December 2022, when all time of 18,887 was registered, suggesting strong breadth in the current rally which started from April 2023,” said Devarsh Vakil, Deputy Head – Retail Research, HDFC Securities.
He believes market trend seems to have resumed on the upside and Nifty is expected to reach the target of 19,000 soon.
On the technical front, a long bull candle was formed on the daily chart with a gap up opening. After the formation of doji type candle pattern on Monday, the Nifty bouncing back decently on Tuesday can indicate short term upside reversal, analysts said
“The Nifty has taken support of 20 day EMA at 18,650 levels and showed an upside bounce from the higher bottom. The said moving average has been offering support for the Nifty in the past and resulted in a sustainable upside bounce from the supports. Hence, one may expect further upmove and Nifty to retest the crucial overhead resistance of 18,900 levels in the short term,” said Nagaraj Shetti, Technical Research Analyst, HDFC Securities.
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Nifty
The Relative Strength Index (RSI), on the lower timeframe, is in a bullish crossover.
“The short-term trend looks green from here, on the upside, the index might witness a rally towards 19,000. On the lower end, support is placed at 18,700,” said Rupak De, Senior Technical analyst at LKP Securities.
Bank Nifty
The Bank Nifty index witnessed a strong bullish move as the bulls took control and surpassed the hurdle of 44,000.
“The surge in buying pressure forced the writers of 44,000 call options to cover their positions. If the index manages to sustain above the 44,000 level, it is likely to continue its upward momentum towards the 44,500 level,” said Kunal Shah, Senior Technical & Derivative analyst at LKP Securities.
Disclaimer: The views and recommendations given in this article are those of individual analysts and brokerage firms. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.
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