A morning walk down Dalal Street | Nifty should reclaim 11,900 if the current momentum stays intact

Bulls are back! Yes, what a day for Indian markets -- a strong rally of 140 points puts bulls back in the driver’s seat. Although, some of it could be because of short coverings

The index managed to close above the crucial short term moving averages in a single session

It has also put aside any negativity thanks to a relief rally in global markets after US Federal Reserve signaled a dovish view and hinted at more rate cuts

The gloominess in the markets took a U-turn and most of the debt-laden companies which cracked on Wednesday showed a sudden upmove on Thursday -- this is a clear indication of a dead cat bounce, says Umesh Mehta, Head of Research, Samco Securities - where fundamentally weak companies face sudden moves for no sound reason, he added.

The Street is also cheering the Fed’s move to keep the rates unchanged with an expected rate cut of about half a percentage point in the coming year. This will ensure an inflow of funds to emerging countries like India and boost the markets.

The rupee Thursday surged 24 paise to close at a one-week high of Rs 69.44 against the US currency on the back of a rally in equities and losses in the dollar after the US Federal Reserve hinted at a possible rate cut in near future.

On the provisional front, FPIs were net sellers in Indian markets for Rs 438 cr while the DIIs were net buyers to the tune of Rs 1241 cr, provisional data showed.

Big News:

RBI MPC minutes: Inflation under control, all eyes on Budget 2019 -- that is the word coming out from the Bond Street

The Monetary Policy Committee (MPC) members unanimously voted in favour of supporting growth while maintaining control over inflation going ahead, according to the minutes of the June rate review meeting.

While the six MPC members unanimously voted for a 25 basis points reduction in RBI’s key policy rate on June 6, the minutes, which was released by the Reserve Bank of India (RBI) on June 20, showed that their views deferred on risks arising out of the government missing its fiscal deficit targets.

“The upcoming Union Budget is, therefore, key to understanding the inflation outlook, especially the response to ongoing distress in the agrarian economy, caused in part by low food prices and reflected in low rural inflation of less than 2 percent compared to urban inflation that remains above 4 percent,” RBI deputy governor Viral Acharya said.

Acharya added that according to counterfactual exercises, a fiscal slippage of 50 basis points or an oil price increase of 10 percent leaves no space to cut the policy rate below 6 percent.

Technical View:

Nifty formed a strong bullish candle or a bullish engulfing pattern on the daily charts

The index closed above its crucial resistance level of 11800, and wiped out most of the losses seen in previous 3 sessions

The index managed to close above most of the short term moving averages which is a positive sign

If the momentum stays intact Nifty should reclaim 11900 levels soon

Three levels: 11635, 11843, 11900

Max Call OI: 12000, 12200

Max Put OI: 11700, 11500

Stocks in news:

OMC stocks will be in focus as Crude Oil rose by more than 3 percent to above $63 a barrel on Thursday after Iran shot down a US military drone, raising fears of a military confrontation between Tehran and Washington. Crude oil has risen by about 5% from its low of $59.97 recorded on 12 June.

Maruti Suzuki India on June 20 said it has increased the price of its popular compact sedan Dzire by up to Rs 12,690 on account of compliance with new safety and emission norms.

Mindtree's board has appointed five new directors, including SN Subrahmanyan, L&T CEO and Managing Director. Co-founder Subroto Bagchi, who retires on July 16, 2019, has not offered to be re-appointed, according to the recent BSE filing.

Technical Recommendations:

We spoke to ICICIdirect.com and here’s what they have to recommend:

Bharat Electronics: Buy| Target: Rs 127| Stop Loss: Rs 99| Upside – 18%| Time Frame 6 months

KSB Limited: Buy| Target: Rs 824| Stop Loss: Rs 638| Upside 17% Time Frame 6 Months

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