Indian Markets Surge In Final Hour As European Rally Boosts Sentiment

Positive sentiments in Asia during the early morning, kept the Indian market stable during the early trading session. After a moderate gap up the headline NIFTY index and a weak close yesterday, the NIFTY index ranged between 24940-25070 during the morning session. The BANK NIFTY witnessed some mild selling from around 51300 levels towards 51100 during the early part of the day. After the initial move, both the highly traded indices in derivative segment traded flat till the early European session. The NIFTY index after 2 pm managed to break the day's high and previously mentioned resistance of 25120 and shot up above 25400 mark.

The index managed to see strong put writing around 25000 strike mid-day forming a base and after breakout of the resistance, the market witnessed short covering from CE writers, pushing the index towards ATH. The BANK NIFTY index managed to surpass the key resistance zone of 51300-400 zone and posted an intraday high of 51871, to finally close at 51668. As we have been mentioning earlier, auto stocks gained sharply with NIFTY Auto edged up 2.14 per cent and another favorite IT space rose 1.60 per cent. Metal stocks have gained the most with NIFTY Metal index advanced 2.91 per cent expecting 50 bp rate cut from Fed after a 2.5 per cent CPI reading from the US. Consumer durable index added 1.33 per cent.

The breadth of the broader market turned positive as NIFTY 500 index witnessed 373 advanced and 125 declines. The headline NIFTY index has 49 advances and only 1 decline today suggesting positive breadth as well.

In global market overnight, the US Dow jones index gained 0.34 per cent and NASDAQ index rose 0.83 per cent, at the time of writing. Looking at the US equity overnight, Asian markets may witness some positive momentum early on, to provide support to Indian market. However, after a strong run up in NIFTY and Bank NIFTY, we may see some profit taking at higher levels. The NIFTY index may get support at 25250-260 levels intraday with mild resistance at 25450-460 zone. In the short term, the upside in NIFTY may get capped at 25600 levels. NIFTY is not at buy on tops now, rather buy on corrective dips. The Bank NIFTY index might see strong resistance around 51900-52000 zone and failure to break the same may lead a correction towards 51500 levels again.

In latest corporate news, Zee Entertainment withdrew merger with Culver Max and BEPL. SBI sanctioned Rs 10,050 crore to DVC for 1,600-MW Jharkhand thermal plant while Amazon India gears up for festive season rush with 1.1 lakh new jobs. In other developing corporate stories, Tata Power EV Charging Solutions Limited announced the signing of a MoU with Tata Motors Limited to set up 200 fast-charging stations for electric commercial vehicles (CV) in all metro’s cities Mumbai, Delhi, Chennai, Bengaluru, Kolkata.

In global front, the US PPI inflation data showing easing inflationary pressure in the economy. The data showed US CPI eased to 1.7 per cent during August from 2.1 per cent in July. PPI Core was unchanged at 2.4 per cent. Both CPI, PPI and latest payroll data suggests a 50 bp rate cut by FED during mid-September meeting.

In commodities, Crude oil September futures on MCX advanced to 5867 from around 5500-50 range a day ago. The bull call spread ideas posted two days back posted decent points. The Crude oil may find some resistance at 5900-5950 and this seem a short covering rally followed by a bullish harami formation in daily chart. Natural Gas prices rose to 201 after breaching the resistance zone of 190-195, quoted at 200.50 at the time of writing.

Theme for Today: Hold Longs in IT, Consumer durable, and Durable finance along with Auto. Index traders may see some range trading with profit booking at higher levels.

Also Read: Mixed Global, Weak Local Markets & Positive US CPI — Watch Out Tomorrow