FOMC, MPC, and Global Elections unveil challenges and opportunities for Nifty and Nifty Bank

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Markets are heading into a perfect storm, with both FOMC as well as MPC showing their hands. We know now that, while rate cuts are coming, they will not be here in a rush. Hence, market bets are going to hinge on how soon they are to arrive, and along side, the elections across the globe will retain potential for acting as a trend setter or stopper.

In this backdrop, it is not surprising that Nifty has been showing signs of a clear unwillingness to surge to a new record high, hinting at the possibility of a time correction. But our modest objectives of 22240-22450/550 continues to be in play though, along with an optimistic target of 22800-23000.

But any prospects of potential delay in the onset of rate cuts, could jolt the ride, but may not be enough trigger a collapse per se. We will have our downside marker at the 20d sma now near 21700, a close below which we could see the time correction in play, with bottom range seen as 20800.

But any prospects of potential delay in the onset of rate cuts, could jolt the ride, but may not be enough trigger a collapse per se. We will have our downside marker at the 20d sma now near 21700, a close below which we could see the time correction in play, with bottom range seen as 20800.

Meanwhile, Nifty Bank is going through a difficult phase, mainly because of its two main constituents were going in two different directions. While PSU bank index is near record peak, Private bank index is over 8% below record peak, and incidentally, Nifty Bank is dominated by private sector banks.

The profit booking in public sector enterprises that spread to state owned banks as well, took some sheen off those stocks, but the pull back towards close underscores the roaring bull market that they are in. Directional moving indicators are however suggesting that the PSU bank index is peaking, but an outright collapse is less expected, with favoured view expecting a side ways trend with a moderate incline for a while.

First published in Financial Express

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