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Indian shares rose 3% today to post second biggest one-day gain of this year as investor sentiment around the globe improved after China cut a key benchmark lending rate to support its economy. The NSE Nifty 50 index ended up 2.89% at 16,266 while the S&P BSE Sensex closed 2.91% higher at 54,326.39 in a broad-based rally to log their first weekly gain in six.

Technical analysts say that Nifty has shown first signs of forming a bottom in the short term though the intermediate trend remains down. 

Heavyweight Reliance Industries was the top boost to the Nifty, surging 6.6% to log its best session since September 2020. Metal stocks, which slid over 4% in the previous session, rebounded to close 4.2% higher. 

Nifty rose smartly 20 aided by positive global cues. A higher than expected record cut in China's 5 year PLR for mortgages (for the second time this calendar year) raised hopes for more policy loosening ahead and boosted risk sentiments. This helped Asian and European markets to trade higher," said Deepak Jasani, Head of Retail Research, HDFC Securities.

“Nifty has shown first signs of forming a sustainable bottom in the short term. A move above 16404 will reinforce those hopes. 16624 will be the next resistance," he added. 

Subash Gangadharan, Senior Technical and Derivative Analyst, HDFC Securities, said: “The daily timeframe of the Nifty indicates that the index has made a double bottom around the 15735 levels and rallied sharply on Friday. A move above the recent swing high of 16400 could lead to further upsides in the coming week. While we remain open to further pullback rallies in the very near term, we must remember that the intermediate trend remains down. The bears would gain more control once the recent intermediate low of 15735 is broken."

Rupak De, Senior Technical Analyst at LKP Securities, said: "On the daily chart, the index has formed a double bottom. Immediate resistance is visible at 16400; a decisive breakout above 16400 may induce a rally towards 16600-16700. On the lower end, support is visible at 16000."

Both Nifty and Sensex had dropped more than 2.6% in the previous session as investors fretted about the impact of high inflation.

Ajit Mishra, VP - Research, Religare Broking, said that “markets have been seeing a roller-coaster ride and the key is to manage the overnight risk. Going ahead, global cues, the last leg of earnings and updates on the Russia-Ukraine war will be on the radar. We reiterate our advice to focus more on managing risk and preferring hedged bets."

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