Trade Setup for September 18: Nifty momentum may continue but the US Fed lies in the way of 25,500

Indian equities extended Tuesday's gains, with the Nifty rising to a fresh three-month high. Following the breakout momentum from the previous session, the Nifty opened with a gap-up start on Wednesday.

However, after the initial rise, the index lacked strong follow-through and traded in a choppy, range-bound manner for most of the day. Intraday dips were absorbed by the bulls, and Nifty eventually closed near the day's high.

The Nifty advanced 91 points to close at 25,330, marking gains in 11 out of the last 13 sessions and recovering more than 900 points from the recent swing low of 24,404 recorded on August 29, 2025.

Bulls remained firmly in control as broader markets stayed active, supported by sector-specific themes. The banking pack, especially PSU banks, saw robust traction, adding to the overall positive sentiment.

Within the Nifty50, Tata Consumer Products, SBI, and BEL led the gains, while HDFC Life, Bajaj Finserv, and Titan emerged as the top laggards.

Sectoral performance was a mixed bag. Nifty PSU Bank, IT, and Oil & Gas indices logged strong gains, whereas Metals, Consumer Durables, and FMCG ended in the red.

Broader markets extended their winning run, with the Nifty Midcap 100 gaining 0.1% and the Nifty Smallcap 100 advancing 0.7%, marking a nine-day streak. Defence stocks rallied for a fourth straight session, buoyed by fresh order wins and sustained investor interest.

On the global front, investor sentiment improved after India and the US agreed to intensify efforts toward an early, mutually beneficial trade deal following a seven-hour meeting between chief negotiators in New Delhi. So far in September, the Nifty has surged 3.7% (over 903 points).

Adding to the buoyant mood, three mainboard IPOs, including Urban Company, made strong debuts on the exchanges, highlighting continued investor appetite for niche midcap companies.

Meanwhile, foreign investors remained net sellers in the cash market, while domestic investors stepped in as net buyers.

Siddhartha Khemka of Motilal Oswal sees a gradual move higher, driven by India-US trade progress, expectations of global liquidity boost from a Fed rate cut, and positive sectoral momentum.

Nagaraj Shetti of HDFC Securities expects Nifty to head towards 25,600 in the near term, with immediate support at 25,150.

According to Rajesh Bhosale of Angel One, the double-bottom breakout around 25,150 as the anchor for the ongoing rally; sees 25,500-25,670 as near-term targets.

Nandish Shah of HDFC Securities said the uptrend remains intact with support near 25,150; resistance is placed at 25,550-25,670.

LKP Securities' Rupak De says the trend remains positive above the 21EMA (around 24,900); resistance at 25,400-25,500. A breakout above 25,500 could trigger an additional 400-500 point rally.

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