Trade Setup for March 20: RSI signals bullish crossover

The Indian equity market extended its rally for the third consecutive session, with the Nifty 50 index reclaiming the 22,900 mark. After a strong upside breakout on Tuesday, the Nifty continued its upward momentum on Wednesday, showing steady growth despite a range-bound trading phase during the early to mid-session.

Market Overview

The Nifty closed the day higher by 73 points at 22,908, supported by strong buying interest in mid and small-cap stocks. The Nifty Midcap100 and Smallcap100 indices surged by over 2.5% each, while key financial heavyweights such as HDFC Bank, ICICI Bank, and Reliance Industries drove the Nifty’s gains.

Foreign Institutional Investors (FII) brought ₹1,463 crore into Indian equities, reversing 17 sessions of consecutive selling, further supporting the bullish trend. Additionally, a softening in the US dollar index added to positive sentiment.

Sector Performance

The rally was led by financial services, realty, PSU banks, healthcare, and metal sectors, as investors engaged in value buying. In contrast, the IT sector remained under pressure, with companies like Tech Mahindra, TCS, and Infosys among the Nifty’s biggest losers.

Technical Outlook for Nifty 50

Nifty is approaching a critical resistance zone near 23,000-23,100 levels. Analysts believe this could be a key hurdle for the market, with a possibility of a brief consolidation or minor dip in the next few sessions. Immediate support is placed around 22,800-22,750 levels.

The index has been trading above the 21 EMA for the past two days, signaling a positive short-term trend. The Relative Strength Index (RSI) is in a bullish crossover, supporting the continued upward momentum.

Key Levels to Watch

Resistance: 23,000-23,100

Support: 22,800-22,750

A decisive breakout above 23,100 could pave the way for a move towards 23,200, and possibly 23,400, the 200-SMA level. On the downside, any negative outcomes could bring the Nifty back to the 22,750–22,700 zone, which could present strong buying opportunities.

Stocks to Watch

Trent: Arm Booker India to acquire 100% equity of THPL Support Services for ₹166.36 crore.

Hyundai Motor India: To raise vehicle prices by up to 3%, effective April 2025.

HIL: Changes its name to "BirlaNu Limited" from "HIL Limited."

Market Reaction to Fed Decision

Markets are likely to react to the US Federal Reserve's meeting outcome, with further focus shifting towards the weekly expiry on Thursday. The post-FOMC developments will likely add volatility to the market, making the confluence zone around 23,000 a critical level to watch.

The market is on a bullish trend, with mid and small-cap stocks showing strong recovery. The focus will remain on the Federal Reserve's decision and how it impacts market sentiment in the short term. Investors should keep an eye on key resistance and support levels as volatility from the Fed meeting and weekly expiry could influence trading strategies in the coming days.