Indian markets opened near an all-time high on Tuesday, however, investors are in a wait-and-watch mode before the Fed rate cut announcements.
Nifty 50 index opened at 25,416.90 points with a surge of 33 points or 0.13 per cent while the BSE Sensex gained 95 points to open at 83,084.63. Both the indices are near their all-time highs of 25445.70 and 83,184.34.
As of 9:30 am, Britannia Industries led the gainers on the NSE, up 1.88 per cent, followed by Apollo Hospitals (1.28 per cent), Divi’s Laboratories (1.15 per cent), Tata Consumer Products (0.99 per cent), and Hindustan Unilever (0.77 per cent). On the flip side, Tata Motors was the top loser, down 2.29 per cent, with HDFC Life (-1.06 per cent), Eicher Motors (-0.87 per cent), Maruti Suzuki (-0.80 per cent), and TCS (-0.68 per cent) also in the red.
Indian markets are showing very strong support and making new highs following the surge in Foreign investment last week.
The market sentiment was buoyed by former New York Federal Reserve President William Dudley’s call for a half-point rate cut, fueling expectations of an aggressive move by the Fed. Prashanth Tapse, Senior VP (Research) at Mehta Equities Ltd., noted, “Overnight, the Dow Jones hit a new all-time high, while Gift Nifty is trading above the dotted lines, though bullish sentiment may be restrained amid uncertainty over the upcoming rate cut.”
In the broader market, Shrikant Chouhan, Head Equity Research at Kotak Securities, observed, “We believe the broader market is bullish but we may see a range-bound activity until the event of the Fed meeting unfolds.” He suggested a strategy to “buy on dips between 25300-25250 levels and protect the same with a stop loss at 25100 levels.”
The technology sector could see increased interest following Infosys’ encouraging results and guidance released overnight. Deepak Jasani, Head of Retail Research at HDFC Securities, commented, “Encouraging results and guidance from Infosys overnight could improve sentiments towards tech stocks and overall market; however it will be interesting to watch as to whether this sustains through the day.”
Tapse added, “Nifty is likely to trade within a range of 25,000-26,000, with 26,000 acting as a key resistance.”
The banking sector continues to show strength, with Chouhan noting, “Bank-Nifty is heading higher for 52400-52500 levels and in the best-case scenario it could be even around 52700 in the near term.”
In commodities, gold and silver prices remained steady, with gold near record highs. Rahul Kalantri, VP Commodities at Mehta Equities Ltd., explained, “Currently, the markets are pricing in a 62 per cent likelihood of a 50-basis-point cut at the conclusion of the two-day FOMC meeting, compared to 43 per cent last Friday.”
Crude oil prices increased by approximately 1.50 per cent, driven by supply concerns following Hurricane Francine’s disruption to production in the US Gulf of Mexico. However, Kalantri cautioned, “These gains were tempered by weaker-than-expected demand growth from China, the world’s largest oil consumer.”
Looking ahead, Sameet Chavan, Head Research, Technical and Derivative at Angel One, advised, “Going forward, the anticipated FED rate cut this week is likely to have a substantial impact on global markets. Hence, it is advisable to maintain a cautiously optimistic outlook and implement effective risk management strategies.”
In the broad market indices on NSE, all indices opened in green with a marginal surge while in sectoral indices the Nifty IT opened in negative with a marginal dip. Bajaj Housing Finance share opened in upper circuit, the share is trading at Rs 178 at the time of filing the report.
Globally markets showed mixed trends, the Asia Dow declined by 0.34 per cent on Tuesday, Japan's Nikkei 225 fell by 0.60 per cent, while South Korea's KOSPI rose by 0.95 per cent and China's Shanghai Composite gained 0.14 per cent.
The European Central Bank’s decision to leave interest rates unchanged and the potential for a September rate cut also added to the global economic backdrop influencing Indian markets.
In the U.S. markets on Monday, the S&P 500 increased by 0.13 per cent to 5,633.09, the Dow Jones rose 0.55 per cent to 41,622.08, and the Nasdaq Composite dropped 0.52 per cent to 17,592.13, reflecting mixed investor sentiment amid speculation on potential U.S. Federal Reserve rate cuts.
As the trading day progresses, investors will be closely monitoring any developments that could impact the Fed’s decision, while also keeping an eye on sector-specific movements and individual stock performances in the Indian market.