Indian markets off days high; defensive trio of Nifty FMCG, Pharma and IT leads, traders must closely monitor US Dollar Index movement!

Market Update at 12:07 PM: Early during the day, Indian benchmark indices hit a fresh all-time high with Nifty scaling above yet another milestone of 16,701. However, profit-booking has been witnessed at higher levels as Nifty shed almost 50 points from the day's high in the last half an hour or so.   

Among the sectoral indices, defensives are yet again seen holding the markets steady with a trio of Nifty FMCG, Pharma & IT leading from the front. Nifty Metal is the worst performing sectoral indices.   

All eyes would be on US Dollar Index, which has surged past the 93-mark. The level of 93.20-93.25 should be keenly watched as any move above this level is likely to trigger a fresh momentum in US Dollar Index and that could damage the marching bull army! 

For the first time in history, Nifty ended the day above the 16,600 mark with gains of 0.31 per cent. Despite opening the session on a tepid note and index picking up pace in the second half of the trading session, it went on to log a fresh all-time high. Meanwhile, a mixed performance was displayed by the broader market indices with Nifty Midcap 100 ending up by 0.33 per cent and Smallcap index dropping 0.25 per cent.  

On the daily chart of Nifty, it has formed a bullish candle carrying higher highs & higher lows, indicating continuation of upmove. The defensive sectors like Nifty IT, FMCG, and Pharma aided the move. In the last four trading sessions, Nifty has advanced nearly 335 points. With this sharp move, currently, Nifty is trading 3.25 per cent above the 20-DMA and 4.5 per cent above the 50-DMA. This indicates the overextension of the rally. Generally, any expansion will reverse to the mean level. 

Having said that, the markets continue to remain bullish as per Dow Theory. Hence, as long as the index does not close below the prior bar lows, it’s better to maintain a bullish bias.  On the upside, the level of 16,660 is key resistance. On the downside, the level of 16,480 is key support.