Nifty trades in a narrow range as broader market outperforms

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Nifty is currently holding above 23,300, but the index remains below the immediate resistance at 23,350.

A sustained move above 23,350 may trigger a relief rally towards 23,600.

While, a break below 23,250 can bring back intense selling pressure towards 23,000.

The relative strength in midcaps and the broader market indicates that risk appetite has not deteriorated significantly despite the recent global rate decisions.

Global Triggers

The Fed and BoJ have both moved rates, but the immediate reaction in the Yen remains important.

The Yen continues to remain weak at 156, which reduces the immediate risk of a sharp carry-trade unwind. A sudden strengthening of the Yen or stronger Japanese intervention could change this setup and tighten global liquidity.

Crude oil remains the other major trigger. Brent near the $100–105 zone continues to be important for India, with a sustained fall in crude providing relief to inflation and market sentiment.

For now, Yen and Crude remain the key macro variables to watch, while broader-market strength is providing support to the current relief setup.

The Larger Picture

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The market resumed down trend to 23000-22500 level after Nifty completed 61.8% retracement of the entire fall at 24752 during consolidation, and has now made low 23118 against our 1st target of 23000.

The market has already absorbed the immediate Fed and BoJ rate decisions.

The more important variables from here are Yen, crude oil and global liquidity.

The Yen remaining weak is currently helping delay a larger carry-trade unwind. A sharp Yen appreciation, particularly towards the intervention zone, could change this equation quickly.

At the same time, falling crude would remove one of the biggest sources of inflationary pressure currently affecting emerging markets.

For India, this creates a two-sided setup:

Key Macro Risks Ahead

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