Sensex, Nifty up more than 1.5%; 5 factors driving the market higher

The Monetary Policy Committee (MPC) retained the key lending rate, repo, at 4 percent, and maintained its stance as "accommodative". This is the ninth consecutive policy meeting where the rate setting panel has maintained the key lending rate. The MPC also maintained the reverse repo rate at 3.35 percent and the MSF rate at 4.25 percent.

The high-frequency indicator data released by the government a day earlier indicated strong recovery in almost all 22 indicators, with 19 showing full recovery compared to pre-pandemic levels.

2 Strong global cues

All major US indices finished December 7 session with strong gains as jitters over the omicron variant of the coronavirus eased and investors boosted the Nasdaq by piling into technology stocks.

The Dow Jones Industrial Average rose 492.4 points, or 1.4 percent, to 35,719.43, the S&P 500 gained 95.08 points, or 2.07 percent, to 4,686.75 and the Nasdaq Composite added 461.76 points, or 3.03 percent, to 15,686.92.

European markets also ended higher, with the DAX gaining 2.82 percent, CAC 2.91 percent and FTSE 1.49 percent.

Asian markets took positive cues from their western counterparts and were trading in the green barring the Hang Seng, which was down marginally by just over 0.10 percent, and the Straits Times, which was down by slightly more than 0.2 percent.

The SGX Nifty was up more than 1.4 percent.

Also read: RBI Monetary Policy: MPC keeps repo rate unchanged; stance accommodative

3 Positive sectoral indices

All the sectors in Nifty gained ground and were up close to 1 percent from their previous levels. IT stocks gained the most and the Nifty IT index was up close to 2 percent. This was followed by financial services and banking indices which were up by almost 1.5 percent. The media index was up more than 1.2 percent while the metal, auto, FMCG and pharma indexes were all up less than 1 percent.

Also read: RBI Monetary Policy: Real GDP growth forecast retained at 9.5 percent

4 Strong upmove in heavyweight Reliance Industries

The stock of Reliance Industries Ltd moved up by close to 2 percent on the announcement of a joint venture with Abu Dhabi-based TA’ZIZ for $2 billion chemical projects in Ruwais. The new JV will construct and operate a chloralkali, ethylene dichloride and polyvinylchloride production facility.

5 Technical View

“On the technical front, the key resistance levels for Nifty50 are 17,500 and on the downside 16,900 can act as strong support. Key resistance and support levels for Bank Nifty are 37,300 and 35,500 respectively,” said Mohit Nigam, head, PMS, Hem Securities.

“Nifty 15 minutes future chart shows that index has moved up sharply after the falling channel breakout which is a positive sign,” said HDFC Securities Retail Research.  The reversal could continue towards the north in the forthcoming session. Immediate upside targets are given at around 17,350 – 17,445 levels. The current short term uptrend would reverse if the Nifty goes below the previous intermediate swing low of 17,180, the brokerage added.

Additionally, on the daily chart, the Nifty showed positive momentum and reversed the prevailing downtrend and is still holding the key supports of 17,180-16,780 levels which indicates that bulls are in momentum, said HDFC Securities.  Now the trend has changed and expect further upside levels in the coming days where 17,180 will be the crucial level.

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