Shrikant Chouhan, Head Equity Research, Kotak Securities
Today, the benchmark indices corrected sharply, with the Nifty ends 247 points lower and the Sensex down by 964 points. Among sectors, the Pharma and Healthcare indices rallied over 1 percent, while the IT, Defence, and financial indices shed over 1 percent.
Technically, after a gap down, the market hovered within the range of 23,900/79,200 to 24,000/79,500 throughout the day. We believe that the short-term market sentiment remains on the weak side; however, due to temporary oversold conditions, we could see a quick pullback rally from the current levels.
For traders, the key support zones are at 23,870/79,000 and the 200-day SMA (Simple Moving Average) or 23,825/78,800. If the index remains above these levels, we could see a quick pullback rally towards 24,150-24,200/79,500-79,800. Conversely, if it falls below the 200-day SMA or 23,825/78,800, below which it could slip till 23,750-23,725/78,500-78,350.
Ajit Mishra – SVP, Research, Religare Broking
The market extended its decline for another session, losing nearly 1%, primarily driven by weak global cues. The Nifty opened with a downside gap, testing the support zone near the previous swing low of 23,850 in early trades. It then moved in a narrow range throughout the session before closing at 23,941 on the weekly expiry day. The selling pressure was broad-based, with recent outperformers like IT, banking, and financials among the top losers. However, the broader indices showed relative resilience, ending with a smaller decline of 0.3%-0.5%.
Profit-taking is evident in previously strong sectors like banking and IT, as other sectors remain significantly beaten down. The next key support lies at the 200-day exponential moving average (DEMA) around the 23,700 level. A break below this could lead to further downside for the index. Despite the weakness, oversold conditions and resilience in select pockets present buying opportunities. Traders are advised to align their positions carefully, with an emphasis on prudent stock selection.
Justin Khoo, Senior Market Analyst – APAC, VT Markets
While the current federal funds rate appears moderate in a historical context spanning over 50 years, it is still relatively high when considering the trends of the past decade.
The Federal Reserve reduced interest rates by 0.25% to 4.5%, revising its 2025 forecast upward from 3.5% to 4.0%. This reflects expectations of persistent inflationary pressures, as inflation remains above the Fed’s 2% target. The “higher-for-longer” stance signals the Fed’s determination to combat inflation while managing risks to the economy.
Impacts on the USD and U.S. Stock Market
A higher interest rate forecast strengthens the USD, attracting global capital to U.S. assets. While this benefits dollar-denominated investments, it pressures export-oriented U.S. companies by increasing the cost of their goods abroad.
U.S. stock markets may see declines, particularly in tech and growth sectors, as higher rates reduce the present value of future earnings. Interest-sensitive sectors like real estate and utilities could also face further challenges, while overall market sentiment may remain cautious.
How would it affect the Indian Stock Market
Foreign Portfolio Investments (FPIs) could experience possible outflows, putting downward pressure on market indices. The Indian Rupee (INR) may weaken against the US Dollar (USD), benefiting export-oriented sectors but posing challenges for import-heavy industries. Interest-rate-sensitive sectors like real estate, autos, and capital goods may underperform, while IT and export-oriented sectors stand to gain from a stronger USD. Inflationary pressures could negatively affect consumer sectors, potentially dampening their performance. Overall, market sentiment may be marked by increased volatility, with investors adopting a more cautious approach.
Impacts on the NIFTY
For India, a stronger USD could result in foreign portfolio outflows, weakening the NIFTY 50. A depreciating INR raises import costs, impacting sectors like energy and aviation, while benefiting export-driven IT firms. Interest-sensitive sectors such as real estate and autos may underperform due to higher borrowing costs
Prashanth Tapse, Senior VP (Research), Mehta Equities
Markets were plundered tracking negative global cues as benchmark indices slipped below their psychological levels on broad-based selling after the US Fed’s hawkish stance raised concerns over further rate cuts next year. Rising US bond yields has pushed global currencies, including the rupee to new lows while renewed foreign fund outflows from domestic equities could prompt investors to turn risk averse.
Vinod Nair, Head of Research, Geojit Financial Services
The Indian market saw a widespread decline following a global sell-off driven by the US Fed’s hawkish stance on interest rates. Sectors sensitive to interest rates, such as banking and real estate, significantly bore the brunt. However, the BoJ’s decision to keep its interest rate steady, which surprised economists, aided in reducing the selling pressure. Despite this, investor caution persisted amid ongoing FII selling, with a strategic shift towards defensive sectors like pharma as evidenced by their outperformance.