The Indian stock market recovered all morning losses to close in the green on Thursday, with Sensex and Nifty extending gains for the fifth consecutive session despite a hawkish Fed dampening sentiment briefly.
Sensex rose 254 points to close at 77,410, while Nifty 50 gained 82 points to end the session at 24,168. Broader markets also extended gains, with Nifty Midcap 100 and Nifty Smallcap 100 indices gaining up to 0.5%.
IndiGo, Trent, NTPC, Bharat Electronics (BEL) and HDFC Bank shares gained around 2–3% to lead gains on Sensex, while those of Infosys tumbled around 3% to lead losses. This came as India VIX, which measures volatility in the market, tumbled 3.5% to 12.73.
Fed’s hawkish tone
The US Federal Reserve held interest rates unchanged on Wednesday, but a higher number of policymakers expected a rate hike in borrowing costs later this year amid growing concerns about inflation lodged above the US central bank's 2% target. In what was the first Fed FOMC meet under Chairman Kevin Warsh’s tenure, the American central bank acknowledged that inflation was “elevated relative to the Committee’s 2% goal”, which was attributed in part to “supply shocks that have driven price increases in certain sectors, including energy.”
The hawkish tone offset the impact of a continuing decline in oil prices below $80 per barrel after Iran and the US agreed to a peace deal.
Nifty Bank, Nifty Pharma, Nifty PSU Bank and Nifty Realty indices gained nearly 1%. Nifty IT, meanwhile, dropped more than 1%. The overall market breadth was positive, with 1,902 advances on NSE and 1,384 declines, along with 98 stocks that remained unchanged.
What lies ahead?
The domestic equities traded within a range, maintaining a positive bias as the initial optimism surrounding the US–Iran peace deal was tempered by hawkish remarks from the US Fed, said Vinod Nair, Head of Research at Geojit Investments.
“Energy-driven inflationary pressures may prompt central banks to consider rate hikes in the latter half of the year, leading investors to adopt a cautious stance. However, the sustained decline in crude oil prices and moderation in Indian bond yields could offset inflationary concerns in the second half of FY27, with market participants awaiting further clarity on the peace agreement. Banking stocks outperformed, supported by expectations of strong credit growth and the sector's attractive valuations,” he further said.
Technical view on Nifty
Though yesterday’s rise lacked momentum, there were no signs of a premature end to upsides for which we had pencilled in 24,200 as the initial objective, followed by 24,300–24,600, said Anand James, Chief Market Strategist at Geojit Investments.
“That said, expect bears to dominate early in the day, followed by an attack on 24,000, but we will wait for a slip past 23,800 to abandon upside hopes. Alternatively, a pullback above 24,060 will signal a return to the upside trajectory,” he added.
(With inputs from agencies)
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
