Stock market today: Will Sensex, Nifty rise or fall after Fed rate hike?

GIFT Nifty futures were trading around 23,243 points at 8:57 am, indicating a largely flat start for the Nifty 50, which closed at 23,217.60 on Wednesday. The US Fed raised rates by 25 basis points in a unanimous decision, marking its first rate increase in more than three years.

In Short

• US Fed hikes rates by 25 bps, signals another hike this year
• Markets to start muted amid global caution and crude prices
• NSE IPO opens today, attracting major anchor investors

Stock markets are set for a muted start on Thursday after the US Federal Reserve raised interest rates by 25 basis points and signalled the possibility of another hike by the end of the year. Elevated crude oil prices, continued foreign selling and a busy primary market, including the much-awaited NSE IPO, are expected to keep investors cautious.

GIFT Nifty futures were trading around 23,243 points at 8:57 am, indicating a largely flat start for the Nifty 50, which closed at 23,217.60 on Wednesday. The Sensex ended the previous session at 74,336.45, gaining 332.63 points or 0.45%.

The Fed raised rates by 25 basis points in a unanimous decision, marking its first rate increase in more than three years. Its latest quarterly projections showed that 16 of 18 policymakers expected at least one more 25-basis-point rate increase by the end of the year.

WHY MARKETS COULD REMAIN UNDER PRESSURE

The Fed's decision is likely to remain a key driver for Indian equities. Higher US interest rates can reduce the appeal of emerging markets such as India for global investors and put pressure on foreign capital flows.

Information technology stocks could also remain in focus, as Indian IT companies generate a significant share of their revenue from the US market.

However, the impact of the rate hike itself could be limited because markets had largely anticipated a 25-basis-point increase. Investors are likely to focus more closely on the Fed's commentary and projections for clues about the future path of interest rates.

Hitesh Tailor, Technical Research Analyst at Choice Broking Private Limited, said Indian equities could see a cautious start as global cues remain mixed.

"Indian equities are likely to open lower, with Gift Nifty trading around 23,234.50, indicating a weak opening for the domestic markets. Global cues remain mixed, as U.S. equities closed sharply lower following the Federal Reserve’s rate hike amid persistent inflation concerns and elevated crude oil prices. Asian markets are mostly trading higher, with Japan and South Korea gaining, while investors assess the Fed’s policy outlook and geopolitical developments," Tailor said.

The Nifty recovered in the previous session after falling sharply in recent weeks. It closed at 23,217.60 on Wednesday after recovering from an intraday low near 23,116.

According to Tailor, the index formed a Doji-like candle, indicating indecision after the recent decline. Its RSI stood at 27.31, keeping the index in oversold territory, although Nifty continues to trade below key moving averages.

The 23,000-23,080 zone is the crucial support area, while 23,300-23,450 is the immediate resistance zone.

"Put OI around 23,200–23,000 may provide downside support, while Call OI near 23,300–23,500 could limit the recovery. With PCR at 0.97 and VIX at 13.17, oversold conditions may support a technical rebound, although a sustained move above resistance is required for further recovery," Tailor said.

NSE IPO OPENS TODAY

The NSE IPO will also be a major focus for investors on Thursday as the exchange's public issue opens for subscription. It will become the fifth active offering in the primary market.

The exchange allocated shares worth Rs 6,746 crore to anchor investors on Wednesday, including Norway's and Abu Dhabi's sovereign wealth funds, at Rs 1,785 per share, the upper end of the IPO price band.

The heavy primary-market activity comes at a time when the secondary market is dealing with continued foreign selling, creating another factor for investors to track during Thursday's session.

CRUDE OIL REMAINS A KEY RISK

Brent crude eased slightly to around $106 a barrel after Saudi Arabia reportedly offered additional cargoes through Oman, helping reduce some concerns over supply disruptions.

However, restrictions around the Strait of Hormuz and continuing geopolitical tensions remain a risk to the oil market outlook.

For India, sustained high crude prices could keep inflation, the trade balance and the rupee in focus, while also adding to concerns around global interest rates.

Bank Nifty closed at 56,292.45 on Wednesday, gaining 497.70 points or 0.89%, after recovering from an intraday low of 55,812.20. PSU banks saw stronger participation during the session.

Tailor sees immediate support for Bank Nifty at 55,700-56,000, while 56,500-56,800 is the resistance zone.

"A sustained move above the resistance zone could improve short-term momentum, while failure to hold support may bring selling pressure back," he said.

FII SELLING VS DII SUPPORT

Foreign institutional investors remained net sellers, offloading equities worth approximately Rs 2,000 crore during Wednesday's session. Domestic institutional investors continued to provide support, purchasing equities worth around Rs 3,900 crore.

The difference between continued FII selling and DII buying remains an important factor for the direction of the domestic market.

"The overall market bias remains cautious, with Gift Nifty indicating a weak opening despite the previous session’s recovery in Nifty and Bank Nifty. Oversold RSI conditions may support buying interest at lower levels, but global weakness and continued FII selling could limit the upside," Tailor said.

For Thursday, investors will therefore be watching the Fed's guidance, crude oil prices, FII flows and the NSE IPO, while the Nifty's 23,000-23,080 support zone could be important if selling returns.

(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)

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