Nifty likely to open gap up; may reclaim 8,200 levels

Domestic equity benchmarks are likely to open with a gap up following mixed closing of the US market in overnight trade and strength seen in most Asian markets early Wednesday. SGX Nifty futures were trading 1 per cent higher.

On Tuesday, the S&P 500 index in the US snapped a five-day winning streak and closed short of the psychological mark at 2,000 level. Many technical analysts were of the view that the rally seen in the US index post the recent correction was driving markets globally. The Dow Jones Industrial Average, however, closed marginally higher..

US trade deficit jumped almost 16 per cent in August to $48.3 billion, a report on international trade showed overnight. Weak jobs data released last week raised hopes that the US central bank might delay a rate hike till 2016. Goldman Sachs Group on Tuesday jumped on the bandwagon and said there is a chance the US policymakers would delay raising interest rates well into next year.

However, John Williams, President of the Federal Reserve Bank of San Francisco, on Tuesday said he still expected the central bank to begin raising short-term interest rates this year, despite a slowing of job gains in September.

"[T]hings are looking up, and if they stay on track, I see this as the year we start the process of monetary policy normalization," Williams said in a speech to the Urban Land Institute in San Francisco.

Provisional data available with the BSE showed foreign portfolio investors (FPI) were net buyers of equities to the tune of Rs 480 crore on Tuesday. But domestic institutions were seen selling stocks to the tune of Rs 424 crore.

"I would continue to stay positive. I do not think there is much of a worry despite the fact that Tuesday's session was not decisive. I think after having a big bar on charts, you are basically having some kind of subdued moves. But one thing is very clear: All the dips should be bought into in this market as long as Nifty does not close below 8,050," said Mitesh Thacker, technical analyst at miteshthacker.com

Nifty has done well in the last couple of days and is slowly heading towards 8,350-8,400, said Ashwani Gujral, Fund Manager, Ashwanigujral.com.

"The good news is that index heavyweights ONGC and Reliance Industries have started participating in the rise. If the first few quarterly results come in a bit better than expected, then that will probably help the market to move up," he said.

Mayuresh Joshi of Angel Broking believes that 7,600-8,200 is the broad range thatNifty should be trading in.

"A 100-point rally on the upside does not warrant a re-rating for the market. I think it entirely hinges upon how corporate earnings will pan out, which we do not foresee. So the range might continue for some length of time," Joshi said.

Sandeep Wagle of Sandeep Wagle, Founder & CEO at PowerMyWealth, believes 8,050 on Nifty would be a crucial level for the next few days that also should not be broken. "I would talk of a move towards 8,250 at the least. I would not be surprised if even 8,350 is tested. So 8,000-8,050 to 8300-8400 is the range for Nifty for the next couple of weeks," said Wagle.