Indian Benchmark Indices Open Higher on Fed Rate Cut Hopes

Market Update at 10:15 AM: Indian equity markets began Monday’s session on a positive note, following strength in other Asian indices, after U.S. Federal Reserve Chair Jerome Powell indicated that an interest rate cut could be on the table next month.

At 9:18 a.m. IST, the Nifty 50 traded 0.28 per cent higher at 24,939.15, while the BSE Sensex gained 0.29 per cent to 81,542.95. Out of 16 major sectors, 12 were trading in the green. The Nifty Midcap and Nifty Smallcap indices also edged up, advancing 0.4 per cent and 0.3 per cent, respectively.

Powell, in his Friday remarks, highlighted the rising risks to the labor market while stressing that inflationary pressures still persist, suggesting that the September decision on rates remains uncertain. A potential rate cut in the U.S. typically boosts the appeal of emerging markets like India by attracting foreign inflows, while also putting pressure on U.S. Treasury yields and the dollar.

Pre-Market Update at 7:30 AM: On Monday, August 25, Indian equity benchmarks, Sensex and Nifty 50, are expected to open on a positive note, tracking strong global trends and rising expectations of a US Federal Reserve rate cut. As of 7:07 AM, the GIFT Nifty was trading near 24,969, up 91 points from its previous close.

Asian markets traded higher in early trade, while Wall Street ended last week strongly, with the Dow Jones hitting a record closing high after Jerome Powell’s address at the Jackson Hole symposium.

On Friday, August 22, Foreign Institutional Investors (FIIs) turned net sellers, offloading equities worth Rs 1,622.52 crore. Domestic Institutional Investors (DIIs) also booked profits, selling shares worth Rs 329.25 crore. This marked the end of their longest buying streak of 33 consecutive sessions.

Profit booking weighed on Indian equities on Friday. The Sensex fell 0.85 per cent to 81,306.85, slipping over 700 points during the day. The Nifty 50 also declined 0.85 per cent to close at 24,870.10. Broader markets were more resilient, with the BSE Midcap index down 0.23 per cent and the Smallcap index lower by 0.35 per cent.

US markets closed higher on Friday. The Dow Jones advanced 846.24 points or 1.89 per cent to 45,631.74, the S&P 500 rose 96.74 points or 1.52 per cent to 6,466.91, and the Nasdaq gained 396.22 points or 1.88 per cent to 21,496.53.

US Federal Reserve Chair Jerome Powell signalled that policy adjustments could be on the table in coming months, hinting at a possible interest-rate cut in September. However, he cautioned that the final decision would depend on inflation and labour market data.

The US dollar index rose 0.24 per cent to 97.50 after dropping sharply last week. Gold slipped 0.1 per cent to USD 3,367.50/oz in early Asian trade, while crude oil remained firm with Brent futures above USD 67 per barrel and WTI near USD 68 per barrel.

This holiday-shortened trading week will see investors focus on multiple triggers, including the monthly F&O expiry, India GDP data, changes in the Nifty 50 index, global crude oil prices, and other macroeconomic indicators. IPO activity, Quarterly Results, dividend announcements, right issues, and bonus declarations in Large-Cap, Mid-Cap, and Small-Cap companies may also influence market direction.

For today, PG Electroplast and RBL Bank remain on the F&O ban list.

Disclaimer: The article is for informational purposes only and not investment advice.