The Nifty 50 has shown strong rallying momentum since Thursday’s open, driven by a combination of dovish signals from the US Federal Reserve and optimism around US-India trade talks.
The Fed met market expectations by cutting interest rates by 25 basis points, while signalling that future rate cuts will require stronger justification. However, during the press conference, Fed Chair Jerome Powell struck a dovish tone. He downplayed the risks of inflation and highlighted weaknesses in the labour market, supporting a risk-on environment.
On the US-India trade front, talks held in New Delhi concluded without a major breakthrough. Despite this, India’s Chief Economic Adviser expressed confidence that a deal is closer than ever and could be finalised by March. Indian Prime Minister Narendra Modi and US President Donald Trump also had a “warm and engaging” conversation recently, which adds to the positive sentiment.
Looking ahead, the US Non-Farm Payroll (NFP) and Consumer Price Index (CPI) reports due next week will be key market drivers. Strong data could prompt a hawkish shift in Fed rate expectations, weighing on global risk appetite and potentially pressuring the Nifty 50. Conversely, weaker-than-expected data should boost rate cut bets and support equity markets.
Technical Analysis of Nifty 50
On the daily chart, the Nifty 50’s recovery has been supported by Powell’s dovish remarks and hopes for progress in US-India trade negotiations. A rally towards the all-time high could trigger selling pressure, with sellers likely to defend that level. Should prices break decisively above the all-time high, bullish sentiment will strengthen, targeting new peaks. A failure to break higher could result in a pullback to around the 25,317 level.
The 4-hour chart reflects ongoing bearish momentum governed by a downward trendline. Sellers are expected to defend this trendline with defined risk above it, aiming for lower prices. Conversely, a break above the trendline would signal increased buyer interest and potentially more gains towards new highs.
On the 1-hour chart, buyers aggressively entered at Thursday’s open, pushing the price above the key 25,900 level. This has shifted the short-term bias to bullish. Should the price pull back to the 25,900 support level, buyers are likely to hold and continue targeting higher levels. A break below this support, however, could strengthen selling pressure and open the way for new lows.
Upcoming Catalysts
Indian inflation data is due today, which could impact market sentiment locally. Next week’s US NFP and CPI releases remain critical in guiding the Fed’s monetary policy outlook and global risk sentiment.
Forex traders should monitor these key economic releases closely, as they will influence USD pairs and have spill-over effects on emerging market currencies such as the Indian rupee. The interplay between Fed policy signals and US-India trade developments will also be vital considerations for positioning in markets over the coming weeks.
Original Source: Giuseppe Dellamotta of investinglive.com
