Nifty 50 trade higher on Friday extending yesterday’s gains from strong gains in banking and financial services. Nifty 50 mirrors Wall Street which managed to rally during the last hour of the trading session. Meanwhile, foreign institutional sales have reduced in Nifty 50, helping the index to continue higher for the second day.
On the coronavirus front, India reported 407 deaths and 17,296 coronavirus cases in the last hours, and now the total number of COVID-19 infections reach 490,401 while the deaths surpassed 15,301 fatalities. On Thursday, the number of recoveries was 96,173 more than the number of active cases. Investors also worry from a rise in tensions between India and China with India accusing China of deploying army and weapons in the Himalayan borders.
IMF now predicts that Indian GDP will contract by 4.5% revised the April projections of a 2% growth for the year.
India reported that GDP grew by 4.2% in May, as the contraction accelerates the quarterly GDP growth numbers show that from 7% growth, shrunk to 6.2%, then to 5.6%, 5.7%, 4.4% and finally 3.1% in the quarter that ended with the coronavirus lockdown.
The economic data continue to deteriorate. The Housing sales have plunged to a new low across India’s top cities in the 2Q of 2020 as the lockdown brought business and economic activities to a standstill. Sales of a residential estate in top Indian cities plummeted 81% on-year during April-June.
Nifty 50 is 1.10% higher as of writing at 10,399 close to daily highs and keeping the positive momentum alive as the index holds above the 100-day moving average. Nifty 50 has gained over 38% since the March lows amid the coronavirus sell-off. The technical picture is positive for the short term as long as it trades above the 100-day moving average. What can cancel the positive momentum is if the index closes below the 10,000 psychological mark.
Looking higher, the first resistance for the Nifty 50 index stands at 10,409 the daily high. A break above 10,409 might open the way for 10,561 the high from June 24. A settlement above 10,561 would open the way for a bigger rally up to 10,901 the 200-day moving average.
On the other hand, initial support for the Nifty 50 index will be met at 10,311 the daily lows. The next support zone for Nifty 50 will be met at 10,186 the low from yesterday’s trading session. In case of a convincing break lower then the next support is at 10,003 the 100-day moving average.