Nifty 50 and Sensex Today: What to Expect from the Indian Stock Market After US Fed Rate Cut?

The Indian stock market is poised to open higher today, with benchmark indices Nifty 50 and Sensex likely to see positive momentum. This comes after the US Federal Reserve announced an unexpected interest rate cut of 50 basis points, bringing the rate to a range of 4.75% to 5.00%. This move is aimed at easing monetary policy, sparking optimism among global investors.

The Gift Nifty, a key indicator of market sentiment, was trading at approximately 25,400—30 points higher than the Nifty futures’ previous close. This signals a strong start for the Indian stock market, as traders prepare for a new day of action.

Overview of Nifty 50 and Sensex Performance

On Wednesday, the Indian stock market witnessed a bit of a pullback after hitting all-time highs. Profit booking at elevated levels led the Sensex to fall by 131.43 points, closing at 82,948.23, while the Nifty 50 dropped by 41 points, or 0.16%, to settle at 25,377.55.

This slight decline followed a rally in previous sessions, as the markets reached new heights. However, as profit-takers entered the scene, the momentum slowed, leading to a temporary dip. The formation of a small negative candle on the daily chart, along with upper and lower shadows, indicates high volatility in the market.

US Fed’s Interest Rate Cut: A Key Driver for the Market Today

The US Federal Reserve’s decision to cut interest rates by 50 basis points has bolstered global investor sentiment. The rate cut is part of a broader effort by the Fed to control inflation and stimulate economic growth. With inflation moving closer to the central bank’s 2% target, this rate cut is viewed as a positive sign for global markets, including India.

The rate cut has led to increased optimism in global markets, particularly in emerging economies like India, where lower interest rates in the US can attract more foreign investment. Indian markets are expected to open higher today in response to these developments.

Nifty 50: What to Expect in Today’s Trade

According to Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, the short-term trend for Nifty 50 remains positive despite recent volatility. The index has been moving within a narrow range, and any dips toward the 25,200 – 25,100 levels are likely to be seen as buying opportunities by market participants.

Shetti also suggests that a decisive move above the 25,500 mark could lead to further upside potential. This resistance level has been closely watched by traders, and a breakout could push Nifty 50 toward higher targets in the near term.

Key Support and Resistance Levels for Nifty 50

Support Levels:

• 25,300: This is the first key support level where buyers may step in if the market faces selling pressure.
• 25,200 – 25,100: A further drop below 25,300 could bring the Nifty 50 down to this range, offering another buying opportunity.

Resistance Levels:

• 25,500: The most critical resistance level for Nifty 50, where significant call writing has been observed. A break above this level could trigger a fresh rally.
• 25,600: A secondary resistance level, which, if breached, could signal a strong bullish momentum for the index.

According to Rupak De, Senior Technical Analyst at LKP Securities, the Nifty 50 has been trading within a small range, making the 25,300 level a crucial support. A fall below this point could lead to a further decline toward the 24,900 – 25,000 range. On the other hand, a breakout above 25,500 would confirm a bullish trend.

Nifty Open Interest (OI) Data: What it Tells Us

Hardik Matalia, Derivative Analyst at Choice Broking, highlighted the Open Interest (OI) data for Nifty 50. The highest OI on the call side is concentrated at the 25,500 and 25,600 strike prices, signaling resistance at these levels. On the put side, the highest OI is seen at the 25,300 and 25,200 strike prices, indicating that these levels are likely to act as strong support for the market.

Bank Nifty: Strong Performance Amid Market Volatility

While the broader market experienced a dip, Bank Nifty outperformed, closing 561.75 points higher at 52,750.40. The banking index formed a long bullish candlestick on the daily chart, indicating strong buying interest in the sector. Analysts believe that Bank Nifty is well-positioned to test its all-time high of 53,350 in the upcoming sessions.

Aditya Agarwal, Head of Derivatives and Technical at Sanctum Wealth, noted that Bank Nifty’s structure remains positive, with immediate support at 52,400 – 52,150. Any dips to these levels could provide an opportunity for fresh long positions. On the upside, a move toward 53,350 could offer traders a chance to book profits.

Technical Analysis Insights: High Volatility and Market Sentiment

The Nifty 50’s current technical setup indicates high volatility, especially at elevated levels. Despite this, experts like VLA Ambala, Co-Founder of Stock Market Today, remain bullish on the overall market trend. Ambala noted that while the Relative Strength Index (RSI) is currently overbought on the monthly and weekly timeframes, the market continues to show strength.

Ambala’s advice to investors is to focus on high-quality, growth-oriented assets, particularly in sectors like IT, banking, and pharmaceuticals. These sectors tend to perform well in volatile markets and are considered safe havens during periods of uncertainty.

Additionally, she recommended caution for investors with shorter investment horizons (less than two years), as the market’s overbought condition could lead to short-term corrections.

Key Takeaways for Today’s Trading Session

• Nifty 50 is likely to see support around the 25,290 and 25,150 levels, with resistance between 25,410 and 25,490.
• Bank Nifty could continue its upward momentum, with immediate support at 52,400 and potential upside to 53,350.
• The market remains bullish overall, but traders should watch for volatility and consider profit booking near key resistance levels.

Investors are advised to keep an eye on global factors, such as ongoing geopolitical tensions and inflationary pressures, which could influence market movements in the coming days.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Wealthy Monk. We advise investors to check with certified experts before making any investment decisions.