Jackson Hole Symposium: At the annual Jackson Hole Symposium, the US Fed chair Jerome Powell dropped feeble hints that “policy adjustments” may occur in the coming months, but warned that risks of higher inflation remain.
This was cheered by the US stock market as Wall Street witnessed participatory buying on Friday after Jerome Powell’s speech. The US dollar came under selling pressure on hopes of a US Fed rate cut. So, stock investors in India must be eager to know how Dalal Street would react to the Jackson Hole Symposium outcome after Jerome Powell’s speech.
According to stock market experts, Jerome Powell’s speech at the Jackson Hole Symposium has triggered the US Fed’s hopes of cutting rates in the September meeting. They are predicting a positive opening of the Indian stock market on Monday.
Jackson Hole Symposium impact on D-street
Expecting a gap-up opening on Monday, Sugandha Sachdeva, Founder of SS WealthStreet, said, “The Indian stock market is poised to open on a positive note, taking cues from Fed Chair Jerome Powell’s highly anticipated Jackson Hole address, where he delivered a clear dovish signal that a rate cut is imminent. By acknowledging the rising risks of a weakening US job market, Powell effectively conceded the possibility of shifting the Fed’s monetary policy stance to support employment and growth.”
Echoing with Sugandha Sachdeva’s views, VK Vijayakumar, Chief Investment Strategist at Geojit Investments, said, “US Fed chief Jerome Powell’s speech at Jackson Hole Symposium indicates a US Fed rate cut in September. His remark that ‘there is a downside risk to unemployment and shifting risk balance may warrant policy adjustment’ indicates a rate cut in September. The US markets have responded with a rise in stock prices and a decline in bond yields. Even though Powell indicated responding to risks to unemployment with a rate cut, he also sounded concerned about the upside risks to inflation and the readiness to respond to that at the right time. Indian market, too, may respond positively on Monday, but here, tariff concerns are likely to weigh on markets more.”
Trigger for RBI rate cut
On triggers that may boost Dalal Street bulls, Sugandha Sachdeva said, “Global risk sentiment turned upbeat, with Wall Street benchmarks registering strong gains, and these positive cues are likely to spill over into domestic equities. Additionally, weakness in the US dollar index enhances the relative appeal of Indian assets, further bolstering market sentiment. A US Fed rate cut could also give the Reserve Bank of India added flexibility to consider a final 25-bps rate reduction in its upcoming policy review, potentially marking the culmination of the current easing cycle.”
Indian stock market outlook
Speaking on the outlook of the Nifty 50 index, Shiju Kuthupalakkal, Senior Manager of Technical Research at Prabhudas Lilladher, said, “The Nifty 50 index witnessed heavy profit booking during the intraday session to form a bearish candle on the daily chart with a lower top formation to signify bias turning weak and can expect for downward movement in the coming sessions. The index would have the important 50-DEMA level near the 24,850 zone, and as mentioned earlier, it has crucial support near the 24,500 zone, which needs to be sustained to maintain the overall trend intact. On the upside, a decisive breach above the 25,000 zone shall change the sentiment once again, thereafter, expecting further upward move.”