Overnight rally in US Dow could drive Nifty up at open
- The SGX Nifty, which derives its value from the Nifty, traded at 17,106 at quarter past seven. That is 219 points or 1.3% above Monday’s Nifty close of 16,887.
The Nifty could open with a gap Tuesday, early morning data from Singapore Exchange (SGX) indicates. Short covering by FPIs, who hold 87% bearish index futures positions, could aid the possible bounce back. Covering a short position involves buying it back, which raises the security's price.
The SGX Nifty, which derives its value from the Nifty, traded at 17,106 at quarter past seven. That is 219 points or 1.3% above Monday’s Nifty close of 16,887.
The cues follow a relief rally in the US Dow, which closed up 2.7% with a decline in yields on US bonds on weaker than expected manufacturing growth at 50.9 last month from 52.8 in August.
“There could be expectations that weaker manufacturing PMI could result in Fed slowing its aggressive rate hikes,” said Hormuz Maloo, director, AFco Investments, referring to the overnight rally in Dow.
According to Maloo, the 200-day moving average at around 16,980 was expected to act as a support but was broken on Monday. If the market bounces on Tuesday in line with the SGX Nifty, Maloo expects the 200 DMA to act as a support.
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