Gift Nifty indicates negative opening for Indian stocks

Indian stock markets are likely to open on a negative note on Thursday, despite US Federal Reserve holding the rates steady overnight. Gift Nifty at 22,660 signals a gap down opening of about 100 points for Nifty. Analysts expect the market to remain volatile but stock-specific action will continue on Q2 results. Among the companies that will declare Q2 performance included ARCIL, Asian Paints, Ambuja Cements, Coal India, Equitas Small Finance Bank, ESAF Small Finance Bank, Godrej Consumer Products, IEX, Milky Mist Dairy Food, Motilal Oswal Financial Services, and Suzlon Energy.

Wall Street ended modestly higher following the Federal Reserve’s policy decision, while strong earnings from a major South Korean chipmaker lifted sentiment across Asian technology stocks. U.S. equity futures, however, edged lower as investors weighed mixed results from megacap companies, leaving the global cues for domestic markets somewhat uneven, said Hariselvan Radhakrishnan, Founder & CEO of HST Wealth.

Thomas Priju, Portfolio Manager, Karma Capital on US Fed decision, said while the US Federal Reserve has kept interest rates unchanged at 3.75–4 per cent, the decision is not necessarily a dovish signal for global equity markets. “The 10–2 vote, with two policymakers favouring a 25-basis-point hike, highlights the divergence within the committee as inflation remains elevated. The Fed’s assessment of the economy and the possibility of further rate hikes suggest that the pause should not be interpreted as the end of the tightening cycle in fact markets are increasingly pricing in another rate hike in December,” he said.

For Indian equities, he said, the implications could be significant. “A further increase in US interest rates could keep US bond yields and the dollar elevated, putting pressure on emerging-market capital flows and increasing volatility in the Nifty. High-valuation stocks and segments dependent on foreign portfolio flows could remain particularly sensitive to changes in global liquidity conditions.”

However, the impact on Indian markets will also depend on domestic earnings growth, valuations and the trajectory of foreign investor flows. Investors should remain selective and focus on companies with strong earnings visibility and balance sheets, while monitoring US inflation data and the Fed’s subsequent communication for clues on the future rate trajectory, Priju said.

Meanwhile, Asian markets traded higher in early deals, with both the Nikkei 225 and South Korea’s KOSPI gaining over 0.5%.

Market Outlook by Ponmudi R, CEO of Enrich Money, said despite these positive regional cues, elevated crude prices and ongoing geopolitical uncertainties are likely to limit the scope for a sustained upward move in domestic markets.