Nifty may hit 17650 if it sustains above 17450 support, but rally towards 17750 may see selling pressure

BSE Sensex and NSE Nifty 50 closed flat but in opposite directions on Wednesday, a day before weekly F&O expiry. S&P BSE Sensex ended the day 35.78 points or 0.06% lower at 58,817 points while the NSE Nifty 50 index closed 9.65 points or 0.06% in the green to settle at 17,534. Index heavyweights such as Infosys, Bajaj Finance, State Bank of India (SBI), Kotak Mahindra Bank, Asian Paints, and Axis Bank, among others dragged the index most. Broader market underperformed equity frontliners. S&P BSE Midcap index fell 0.13 per cent or 32 points to 24,524.14, and S&P BSE Smallcap index settled at 27,655.27, down 27.17 points or 0.10 per cent. Analysts say that market trend may remain bullish over the short term as long as NSE Nifty 50 index remains above 17,450.

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Markets traded in a narrow range with a negative bias for most part of the trading session, as traders followed global direction and exhibited caution ahead of the key US inflation data. If inflation inches higher, markets worldwide fear that the US Fed would maintain its hawkish stance and hike rates further. Also US bond yields witnessing a steep curve has been a cause of concern as markets fear it could be a sign of recession going ahead. Technically, the support has shifted to 17450 from 17350. As long as the Nifty is trading above 17450, the uptrend formation is likely to continue and above which, the index could move up to 17600-17650. However, below 17450 the uptrend would be vulnerable and could retest the level of 17350-17300.

Vinod Nair, Head of Research at Geojit Financial Services

Investors were in a cautious mode in anticipation of the release of US inflation statistics, which will set the tone for the next FED policy meeting. The US CPI inflation during July is projected to remain high, in line with June inflation levels. This, along with strong job data, will compel the FED to keep taking a tough approach to rein in high inflation levels.

Rupak De, Senior Technical Analyst at LKP Securities

Nifty has confirmed the resilience of the up trend by closing above the previous congestion high on the daily chart. The important moving averages are lying comfortably below the current index value confirming the uptrend again. The trend may remain bullish over the short term as long as it remains above 17350. However, the rally towards 17750-17800 is likely to attract selling pressure at the higher levels.

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Deepak Jasani, Head of Retail Research, HDFC Securities

Economists polled by FactSet expect headline CPI to slow to 8.7% in July (vs 9.1% in June), but a hotter-than-expected reading on either the headline number, or the core number — which strips out volatile food and energy prices — could rattle markets. Stocks dipped in Asia on Wednesday following a Wall Street retreat and caution ahead of US inflation data that will shape investor expectations for further Federal Reserve interest-rate hikes. Chinese shares wavered as traders evaluated slower-than-anticipated consumer and factory inflation in the world’s second-largest economy. In China, consumer price inflation accelerated in July to 2.7%, the highest level in two years, but missed economists’ expectations. Nifty picked up pace after a dull opening on Aug 08 to close near the intra day high formed at 1335 Hrs. The continued rise in indices though perplexing in the face of concerning macro developments globally has improved sentiments on equity markets. Nifty could now face resistance in the 17595-17651 band while 17408 could offer support.