Indian stock markets saw a positive start on Thursday as Sensex gained around 245 points to trade at 74,586, while Nifty 50 rose more than 104 points to reach 23,321 by 10:15 am. This upward trend comes despite the US Federal Reserve's recent decision to hike interest rates by 25 basis points.
Broader markets also reflected the positive sentiment, with Nifty Midcap 100 and Nifty Smallcap 100 indices rising nearly 1% each. Leading the gains on Sensex were shares of Eternal, the parent company of Zomato and Blinkit, which jumped around 3%. Bajaj Finance saw its shares rise nearly 2%, while BEL, ITC, and Axis Bank each gained over 1%. Conversely, shares of HDFC Bank, TCS, HCL Tech, and Infosys declined by nearly 1% each.
All sectoral indices except Nifty IT traded in the green, with Nifty Metal, Nifty Pharma, Nifty PSU Bank, and Nifty Auto each rising around 1%. The overall market breadth turned positive, with 2,316 advances against 827 declines on the NSE, while 105 stocks remained unchanged.
“There are no immediate signs for inflation to ease, especially given the stalemate in the Middle East. This means the Fed may need to continue to tighten to achieve its target.”
Tai Hui, APAC chief market strategist at JP Morgan Asset Management
The US Federal Reserve's decision to increase the benchmark interest rate to a range of 3.75-4% was driven by persistent inflationary pressures, particularly due to soaring energy prices amid tensions in the Middle East. Traders are now anticipating a 50% chance of another rate hike next month.
Despite the positive market performance, caution is advised as Sensex's weekly expiry day often brings volatility. Additionally, the Indian rupee weakened past the 96-mark against the US dollar, influenced by a stronger dollar following the Fed's rate hike and further tightening signals.
Background
The Fed's rate hike aligns with expectations given the elevated inflation and resilient US economy. However, high bond yields continue to pose a challenge for equity markets. Analysts suggest that strong US corporate earnings may counterbalance the impact of high yields, preventing a sell-off.
The Indian market faces challenges with continuous selling by FIIs over the past six days and geopolitical concerns, including potential tariffs from the US on countries importing oil from Russia. Investors should remain vigilant as these factors could influence market dynamics in the coming weeks.
