Smartly tops 18,400 as US stocks show resilience

Domestic markets are expected to reverse course on Friday, with US stock indexes making big gains on Thursday. SGX Nifty indicates that Nifty could top 18,400.

Analysts said the market remains in a consolidation phase, with the return of FPI and better quarterly results from India Inc.

Inflation in the United States

US stocks are rising as Wall Street finally sees the end of the Federal Reserve’s tightening cycle. That cool inflation report helped stocks post their best trading day in two years. “Treasury yields are in freefall, the dollar is falling and virtually all risk assets are cheering this inflation report,” said Edward Moya, chief market analyst, The Americas OANDA.

Headline reading fell more than expected to 7.7% from last year, which is notably better than June’s peak reading of 9.1%.

“This inflation report was a pleasant surprise. Inflation has been very slow to come down, but this report gives hope that this deflation with price pressures could restore hopes of a soft landing,” he added.

Following US stocks, shares in the Asia-Pacific region are up 2-3.5 percent. Overnight, the Dow Jones Industrial Average rose by 908 points, or 2.8%. The S&P 500 rose 3.6%, while the Nasdaq gained more than 4.9%.

Technically, according to Nagaraj Shetti, Technical Research Analyst, HDFC Securities, the positive chart pattern like higher tops and bottoms continued on the daily chart and Thursday’s swing low could be seen as a new higher bottom in the series. A sustained move above 18100 levels could confirm a higher bottom reversal and it could open another round of upside. Immediate support is placed at 17950 level.

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