US Core Inflation Data: A Make or Break Event for Nifty Today; Trade with Caution

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Nifty Expected to Trade Between 18170 to 18360 Today 10th May 2023; US Core Inflation Data in Focus

The Indian stock market is likely to witness a range-bound trading session today 10th May 2023, as investors await the US core inflation data for April, which will be released in the evening. The NSE Nifty 50 index, which closed at 18,089.85 yesterday, is expected to trade between 18170 and 18360 today, according to technical analysts.

The US core inflation data, which excludes food and energy prices, is a key indicator of the inflationary pressures in the world’s largest economy and has a significant impact on the global market sentiment. The data is also closely watched by the US Federal Reserve, which has recently signaled that it may start tapering its bond-buying program sooner than expected and may hike interest rates next year if inflation persists.

The consensus estimate for the US core inflation data for April is 5.6% year-on-year, unchanged from the previous month, which was the highest since November 1990. However, some analysts expect a higher reading due to the base effects, supply chain disruptions and rising demand as the US economy reopens from the pandemic. A higher-than-expected core inflation data may trigger a sell-off in the global equity markets, as it may raise fears of faster monetary tightening by the Fed and higher borrowing costs for businesses and consumers.

On the other hand, a lower-than-expected core inflation data may boost the market confidence, as it may ease the inflation worries and support the Fed’s view that the current inflation spike is transitory and does not warrant a policy change. A lower-than-expected core inflation data may also support the emerging markets like India, which are sensitive to the US dollar and interest rate movements.

Therefore, the US core inflation data will be a key event to watch for today, as it may set the tone for the market direction for the rest of the week. The Nifty traders should be cautious and follow the price action and technical indicators closely. The Nifty may face resistance at 18350-18370 levels, where the weekly upper Bollinger band is placed. A breakout above these levels may open the doors for further upside towards 18400-18500 levels. On the downside, the Nifty may find support at 18050-18000 levels, where the previous swing low and the daily lower Bollinger band are located. A break below these levels may trigger a correction towards 17900-17800 levels.

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