Taking Stock: Indices hit four-month high post US inflation data, Nifty tops 17,600

Extending their rally, the equity benchmark indices hit a four-month high on August 11, aided by positive global cues as better-than-expected US inflation data raised the hopes about a slowdown in the interest rate hike by the Federal Reserve going ahead.

At Close, the Sensex was up 515.31 points or 0.88% at 59,332.60, while the Nifty was up 124.20 points or 0.71% at 17,659.

The US Consumer Price Index (CPI) was flat last month after advancing 1.3% in June, the Labour Department said on Wednesday in a closely watched report that nevertheless showed underlying inflation pressures remain elevated as the Federal Reserve mulls whether to embrace another super-sized interest rate hike in September, reported Reuters.

Axis Bank, Bajaj Finance, HDFC, Tech Mahindra, and TCS were among the major Nifty gainers. The losers included Tata Consumer Products, Apollo Hospitals, ITC, Hindalco Industries, and NTPC.

Barring FMCG, all other sectoral indices ended in the green with Nifty Bank, Information Technology and PSU Bank rising up to 2 percent.

Stocks and sectors

On the BSE, bank, capital goods, Information Technology, and realty indices rose 1 percent each. However, the FMCG index shed 0.7 percent.

The broader indices - BSE midcap and smallcap indices added 0.5 percent each.

A long build-up was seen in Mahanagar Gas, Indraprastha Gas, and Zydus Lifesciences, while a short build-up was witnessed in Abbott India, Tata Consumer Products, and PVR.

Among individual stocks, a more than 500 percent volume spike was seen in Trent, Bharat Forge, and Bata India.

More than 100 stocks, touched their 52-week highs on the BSE, including Shoppers Stop, Bank of Baroda, Siemens, TVS Motor Company, Karur Vysya Bank, Jyothy Labs, ICICI Bank, Federal Bank, Eicher Motors, and Coal India.

Outlook for August 12

Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities:

Investors cheered the US inflation data for July, which came in below the estimate and raised hopes that the Federal Reserve may not be that aggressive in hiking interest rates in its next meeting. Hence, the optimism spread across Asian markets, including India where investors lapped up banking, IT & realty stocks.

Traders have also been drawing comfort from the falling crude oil prices and FII inflows into the local shares in the last few sessions. Technically, the Nifty is trading near its important resistance level and has also formed a small bearish candle.

For traders, 17,600 would be the key level to watch out for, while the overall chart structure suggests that if the market sustains above the same, then breakout continuation formation could continue till 17,700-17,750. On the flip side, a sharp intraday correction is possible if the index trades below 17,600. Below which, the index could slip to 17,540-17,450.

Rupak De, Senior Technical Analyst at LKP Securities:

The Nifty continued to remain above the consolidation on the daily chart, suggesting a continuation of the up trend in the market. On the higher end; however, Nifty had faced a bit of selling pressure that led to a close around the day's low.

The current rally may extend towards 17,750-17,800, where crucial trendline resistance is placed. On the lower end, support is there at 17,450-17,500.

Gaurav Ratnaparkhi, Head of Technical Research, Sharekhan by BNP Paribas

The Nifty continued its northward journey & nearly tested the trendline drawn from the October 2021 high. It witnessed minor profit booking near the trendline. Going ahead, 17,750-17,800 will be the critical area to watch out for. It is crucial to observe how the structure develops near this make or break zone.

Thus, the recommendation for Nifty traders will be to book partial profit at the current level and hold the rest of the position with a reversal trailed to 17,500.