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The bulls came back with a roar in today's session and it was indeed a super bullish day on Dalal Street, especially after two dismal sessions since Friday. Most importantly, the move higher came just a day ahead of the Fed's rate decision announcement. Dalal Street investors will prefer to remain on the sidelines as they eagerly await the FOMC outcome. Financials helped the Nifty rally by 100 points in today's trading as the PSU Bank Index staged another intelligent rally today, rising nearly 4%. A confluence of factors including positive tailwinds, ownership and investor interest was evident as the rally trickled down to smaller private sector banks as well. Indian benchmark indices closed higher on December 13 with Nifty around 18600 led by information technology stocks and PSU banks. At the close, the Sensex was up 402 points to 62533 and the Nifty was up 110 points to 18608. India's retail inflation fell sharply to 5.88%, which was within the RBI's tolerance band. However, the euphoria was partially offset by an unexpected drop in industrial production, which contracted by 4% in October. The US inflation numbers, due ahead of the Fed announcement, will provide an indication of the Fed's monetary policy stance. Signs point to further recovery but much would depend on how the US market reacts to the inflation data.Markets were firm on short covering as retail inflation slipped to an 11-month low, raising hopes that the rate hike regime might be slowing and paused. Overnight gains in US markets also continued to support local market sentiment, which had slipped into range bound mode in recent sessions.
The uptrend texture is likely to continue in the near term and 18750-18800 would be the next resistance zone for the bulls. On the other hand, another sell-off was not seen until after the 18500 release. Technically, the market not only reclaimed the 20-day SMA (simple moving average) level but also closed above it, which is broadly positive. The bullish candle on daily charts and a promising reversal formation are pointing to the continuation of an uptrend wave in the near future. The Bank Nifty Index continued to trend higher and closed at record levels. Momentum indicators are in the strong buy zone, which will help the index rally higher towards the 45,000 level in the near term. Lower support is visible at 43500 and if broken will lead to further correction towards 43200 level. . The Nifty is seeing a slight recovery within the near-term consolidation. On December 12th the index had taken support near 18350 and then the index made an intermediate bounce. On the way up, it has crossed a declining trend line but has stopped near the upper Bollinger Band on an hourly basis. Also, the daily chart shows that the index has moved up to retest the lower channel line after the recent channel dip. The overall structure shows that Nifty is likely to continue the short-term consolidation in the 18350-18600 range. Bank Nifty is a stone's throw from the short-term target of 43500, above which it can target 45000.
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