Stock market alert ahead of Fed meeting
Stock markets were cautious ahead of the US Fed Reserve’s announcement of a rate hike in its monetary review on Wednesday night. Asian markets including India remained soft. In America, Dow futures were showing a strength of 100 points. Indian benchmark Sensex closed 263 points lower at 19,457 while Nifty closed 98 points lower at 17,718. The market remained muted due to selling pressure in large-caps. 37 out of 50 Nifty counters closed flat. While 13 counter positives were closed. Selling in the broader market also kept the business soft. Volatility index India Vicks closed 2.77 per cent higher at 19.32.
The US Fed will announce a rate hike at 11.30 pm IST on Wednesday. Chairman Jerome Powell will present his commentary at 12 noon. In which his tone will be important for the market. As far as rate hike is concerned, most segments are looking at 75 basis points. Whereas a small section is expecting 100 basis points. Fed chairmen from various US-based states made statements after the August CPI came in higher than expected that the Fed should raise interest rates immediately. Keeping this in mind, there is a small possibility of 100 basis point growth. If it doesn’t, the markets will get a big relief and they can show trades with improved response.
The benchmark Nifty for the Indian market failed to sustain the level of 17,800. Thus it is more likely to remain in a range bound trade. In which there is an important support of 17,300. When 17,800 is the hurdle. The valuation of the Indian market is high as compared to the global competitors. However, its risk-reward looks good even at current levels. Fundamental analysts are pessimistic about the October season results and expect the market to see some downside at first.
On Wednesday, the market got the only support from the FMCG segment. The Nifty FMCG index closed at its highest level with a gain of 1.18 per cent. In which the major contribution of Britannia was seen. The counter closed at the top of the month with a strength of 3.15 per cent. Shares of Hindustan Unilever also closed with a gain of 1.55 per cent. Among other counters Marico, ITC, Dabur India, Colgate, Godrej Consumer, United Spirits were also showing positive closure. ITA Rs. 345 showed a five-year peak. The stock is nearing its life-high. Firma counters that supported the market on Tuesday failed to provide support on Wednesday. The Nifty Pharma index was down 1.4 per cent.
In which Biocon closed with a fall of more than 3 per cent. Apart from this, Alkem Lab, Cipla, Divis Lab, Aurobinda Pharma, Dr Reddy’s Labs, Lupine, Zydus, Torrent Firma and Sun Firma also showed slowdown. The Nifty Metal Index lost over 2 per cent. In which Adani Enterprises suffered a loss of more than 5 percent. While Hindalco was down 2.4 per cent, Jindal Steel 1.5 per cent, Tata Steel 1.3 per cent, SAIL 0.8 per cent, Vedanta 0.8 per cent and MOIL 0.7 per cent. Nifty Energy was second with 1.5 per cent. In which Power Grid Corporation was showing a decline of 2.5 percent. While GAIL, NTPC, ONGC, Tata Power, Adani Green Energy, IOC saw a decline of over one per cent. Nifty PSE too fell 1.3 per cent from some of these counters.
Nifty Auto and Nifty IT also fell by about half a per cent. In the IT segment, HCL Tech declined 1.5 per cent. Apart from this, TCS, Wipro and Inphase also showed signs of softening around one per cent. While L&T Technology, Mindtree, Tech Mahindra were showing improvement. The banking sector witnessed a slowdown at the top. In which a lot of pressure was seen in PSU banks. Bank Nifty fell 0.64 per cent. While the PSU Bank index was showing a fall of 0.71 percent. In which Bank of Maharashtra, Union Bank, IOB, JK Bank, PNB, Bank of India and SBI were the major losers. Nifty Realty saw a decline of over one per cent. In which the brigade enterprise declined by more than 5 percent.
While DLF, Oberot Realty, Godrej Properties, Hemisphere also saw a decline of up to 3 per cent. In the NSE derivatives segment, Cummins India, Dr. Lal Pathlabs, Page Industries, Honeywell Automation and Granules India saw improvement of around 2 per cent.
While ACC, Ambuja Cements, Shree Cements, JK Cements, Indiabulls Housing, Ramco Cements saw heavy losses of up to 7 per cent. The breadth in the broader market was negative. Out of a total of 3587 traded counters on BSE, 2,225 showed negative closes. While 1,241 positives were seen. 165 counters showed their annual peak. While 28 stocks made 52-week lows.