Closing Bell: Nifty ends around 17,800, Sensex surges 650 pts led by financials, IT stocks

Markets were upbeat on the weekly derivatives expiry day and gained nearly a percent, tracking firm global cues. Nifty has again reached the upper band of the prevailing consolidation range (17,300-17,800) and a decisive breakout would fuel the next leg of the up move towards the 18,100+ zone. Importantly, rotational buying across sectors combined with steady foreign flows has strengthened the possibility of a breakout. Participants should align their positions accordingly and avoid contrarian trades.

Nifty rose on September 08 after a two day fall. It opened gap up and then remained in a 102 point range through the day. At close, Nifty was up 0.99 percent or 174.35 points at 17,798.75. Among sectors, banks and IT gained the most, while metals and realty fell the most. Advance decline ratio was positive at 1.56:1.

Nifty broke above the recent high of 17,777 easily. Now the next tough resistance is 17,992. On falls, 17,651 could be the support.

The domestic financial market experienced a wave of optimism tracking strength across global markets as oil prices eased. Despite premium valuations, consistent FII inflows are aiding Indian bourses to stay resilient. On the sectoral front, auto stocks were in focus as retail sales of automobiles grew 8.31 percent YoY in August while banking stocks moved in sync.

Nifty had taken support near the psychological mark of 17,500 on September 7 and had started moving higher. The up move extended on September 8 as well. Consequently, the index is approaching upper end of the consolidation range. 18,000-17,200 has been the short term consolidation range. Thus, the index is likely to stumble as it approaches the 18,000 mark. The overall structure suggests that we are likely to see further consolidation before the index resumes the larger uptrend.

Crude oil prices traded steady with benchmark NYMEX WTI crude oil prices were trading near $81.94 per barrel on Thursday. Crude oil prices pared early gains resumed downtrend on weaker demand. Prices slumped to their lowest levels since January on Wednesday, after weak economic prints from China, interest rate hikes and a surprise rise in US inventories brewed concerns over slowing demand. The US energy watchdog forecast slightly higher demand and tighter supply going into 2023.

We expect crude oil prices to trade sideways to down with resistance at $84 per barrel with support at $80 per barrel. MCX Crude oil September contract has important support at Rs 6450 and resistance at Rs 6650 per barrel.