Indian benchmark indices are likely to open higher on Thursday, tracking the optimism in the Asian stock market after the US Federal Reserve cut the interest rate by 25 basis points, as per the market expectations.
However, traders will also be looking at the development of a trade truce between the US and India.
Nifty futures on the NSE International Exchange traded 91.60 points, or 0.36 per cent, up at 25,515, hinting at a positive start for the domestic market on Thursday. Asian stocks were trading higher on Thursday. KOSPI and Nikkei rose nearly a per cent each, while Hang Seng also edged up marginally.
“We expect the market to continue its gradual up-move, backed by progress in India-US trade talks, potential global liquidity boost by the Fed rate cut and renewed buying momentum driven by positive sectoral cues,” Siddhartha Khemka, Head of Research at Motilal Oswal Financial Services.
US stocks ended lower on Wednesday after a choppy trading session. The Dow Jones Industrial Average rose 260.42 points, or 0.57 per cent, to 46,018.32, the S&P 500 lost 6.41 points, or 0.10 per cent, to 6,600.35 and the Nasdaq Composite shed 72.63 points, or 0.32 per cent, to 22,261.33.
The US dollar index dropped to the lowest since February 2022 at 96.224 against a basket of major peers immediately after the rate decision, but sprang back to be higher on the day at 97.074. Gold prices rose 0.3 per cent to $3670.19 per ounce, recovering from a dip after hitting a record high on Wednesday. Oil prices were steady, with Brent crude last trading at $67.95 per barrel.
Despite the range-bound move, underlying sentiment remains supported by optimism around policy reforms and robust domestic flows. However, persistent FII selling and caution ahead of the US Fed policy outcome capped the momentum, said Ajit Mishra, SVP of Research at Religare Broking. “We recommend continuing with a ‘buy on dips’ approach,” he said.
Provisional data available with NSE suggest that FPIs turned net sellers of domestic stocks to the tune of Rs 1,124.54 crore on Wednesday. On the other hand, domestic institutional investors (DIIs) turned buyers of Indian equities to the tune of Rs 2,293.53 crore on a net-net basis.
Nifty & Sensex outlook
“We expect the momentum to continue, with Nifty likely to test 25,500 and 25,670 in the near term. For support, the bullish gap around 25,250 will serve as an immediate cushioning, while the breakout zone of 25,200-25,100 should now act as a strong base. Traders are advised to maintain a positive bias and use any dips as buying opportunities,” said Rajesh Bhosale, Equity Technical Analyst, Angel One.
The short-term market outlook remains positive. We believe that 25,200/82,500 and 25,150/82,200 are key support zones for trend-following traders, said Shrikant Chouhan, Head Equity Research at Kotak Securities. “As long as the market trades above these levels, the uptrend is likely to continue, Below 25,150/82,200, traders may consider exiting their long positions,” he said.
Nifty Bank outlook
A follow-through strength will open further upside towards 56,000-56,150 levels in the coming sessions being the 61.8% retracement of the entire decline. On the downside, immediate support is placed at 54,800 levels, being the 20- and 100-days EMA, Bajaj Broking said. “While key support is placed at 54,000 levels being the confluence of the last week low and key retracement of the current pullback.”
The 55,600-55,700 zone will act as an immediate resistance for Nifty Bank. A sustained move above 55,700 can lead it to the up move towards 56,200. On the downside, the zone of 55,300-55,200 is likely to act as a support. Any throwback towards this zone can provide buying opportunities on dips, said Sudeep Shah, Head of Technical Research and Derivatives at SBI Securities.