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Domestic indices welcomed the
RBI's decision to keep interest rates unchanged. Nifty gained strength after
the political result and stayed in positive territory throughout the session to
close at 17599 with gains of 42 points. With the exception of FMCG, IT and
consumer discretionary, all sectors ended in the green. The India VIX
volatility index fell further to 11.8, giving traders some comfort. In
addition, FIIs have been steady buyers of Rs 4263 crore over the past five days
and their F&O short positions have been reduced from 92% to 83%, giving
strength to the market. After six consecutive rate hikes, the RBI left the
policy rate unchanged at 6.5%. The decision came as a surprise after most of
the world's central banks hiked further to curb stubbornly high inflation. A
rate pause and encouraging domestic data continue to give the market a positive
undertone. However, given global uncertainties and fears of a US recession, we
could see range-bound action in the near-term. Finally, the Sensex rose 143
points to 59832 and the Nifty rose 42 points to 17599. Technically, the
Nifty has reclaimed the 200-day SMA level after a long time, forming a bullish
candle on the daily and weekly charts. We believe that 17575 and 17525 would
act as key support areas for the index, while 17650 -17750 could act as a
resistance zone. Meanwhile, Bank Nifty has also formed a bullish candle on
weekly charts and is successfully trading above the 50-day SMA. For the index,
40750 or the 50-day SMA could be the sacrosanct zone of support, above which it
could rally towards 41550 -41750. The Bank Index continued its bullish rally
and any dips were confidently bought by the bulls. The index broke above 40000
last week and announced that there has been a one-sided rally. The index is now
trading around the next resistance zone of 41,000 and if we hold above it in
the coming week we expect the rally to continue towards the 42,000 level.
Support at the bottom is visible in the 40,600-40,500 zone, which will act as a
buffer for the bulls.
Resistance: 17650, 17750, 17850
Support: 17550, 17450, 17350
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