Nifty rally may continue in the short term

The stock market movement post the Federal reserve rate hike has been an anticlimax. The markets have refused to go below the Modi Era support range although they did manage to briefly test it. We believe it is still advisable to stay cautious on the long side, as the price structure doesn’t really give us the confidence to say that we have a long term bottom in place. In order to determine if this is the case we would reserve bullish projections until prices actually manage to break and sustain above our long term trend channel depicted in the chart below

The short term bullish momentum may continue and Nifty may potentially end up in the 8035-8075 zone in the coming days. Our long term trend channel has enough room to contain such a rally. It would be wise to not consider the current rally to be the beginning of a sustainable bull market unless we see some concrete developments above the trend channel. There is every possibility we may still see a sharp reversal and fall in the stock market after the rally since the Fed-rate hike has run its course.