Bulls cautious as markets await US Fed's decision on rate cut tonight

With the US Federal Reserve’s interest rate decision approaching, markets saw increased profit-taking and volatility. A majority of investors expect a 50-basis point cut, but should the reduction be less, the markets may react negatively.

In the Indian markets, selling pressure and caution were also evident. Despite the optimism among bulls, the session is likely to open flat with minimal gains. The Fed decision will be announced late at night in India and will impact market sentiment tomorrow.

India's recent decision to roll back the windfall tax after crude oil prices fell is a positive move for companies like ONGC and Oil India.

India's merchandise exports fell by 9.3% in August, while the trade deficit widened to a 10-month high. However, wholesale inflation eased to a four-month low of 1.31%. This year, a record increase in Kharif sowing could lead to bumper agricultural output.

In the derivatives market, Gft Nifty closed at 25,422 on Tuesday night, rising to 25,470 this morning, signalling a positive opening for the Indian market today.

Global market highlights

European markets rallied on Tuesday, with a report that Italian bank unicredit is attempting to acquire Germany’s Commerzbank, driving the latter’s shares to record highs.

Uncertainty over the Fed’s decision also caused mixed results in the US markets on Tuesday. The Dow Jones closed marginally lower, while other indices saw modest gains. The S&P reached a record high during intraday trading.

Microsoft and Blackrock announced plans to raise $10 billion to build AI data centres, lifting their stock prices after the market closed.

The Dow Jones industrial average fell by 15.90 points (0.04%) to close at 41,606.18, while the S&P 500 gained 1.49 points (0.03%) to end at 5634.58. The Nasdaq rose by 35.93 points (0.20%) to close at 17,628.06. US futures indicated modest gains this morning, with the Dow up 0.12%, S&P 500 rising by 0.10%, and Nasdaq gaining 0.66%. The yield on the US 10-year treasury note declined to 3.642%.

Asian markets opened higher this morning, with Japan’s Nikkei up three-quarters of a percent. Concerns over the Bank of Japan raising interest rates have eased, with expectations shifting to a hike in December.

Indian markets' performance

The Indian markets opened higher on Tuesday but remained volatile, eventually closing with minor gains. Media, metal, psu banks, and pharma sectors underperformed.

On the NSE, 1122 stocks advanced while 1665 declined. On the bse, 1712 stocks gained, and 2237 fell.

On Tuesday, the Sensex rose by 90.88 points (0.11%) to close at 83,079.66, while the Nifty gained 34.80 points (0.14%) to end at 25,418.55. The Bank Nifty closed 0.07% (35.50 points) higher at 52,188.55.

The midcap index fell by 0.13% to 60,180.75, and the smallcap index dropped by 0.31% to 19,465.55.

Foreign institutional investors bought shares worth ₹482.69 crore in the cash market on Tuesday, while domestic institutions purchased ₹874.15 crore worth of shares.

Analysts believe that if the Nifty closes above 25,500, the market could surge towards 25,800. Today, the Nifty finds support at 25,370 and 25,350, with resistance at 25,440 and 25,460.

Significant drop in India's exports

India’s merchandise exports fell by 9.3% in August, which is a significant drop. Imports also declined by 3.3%, leading to the widest trade deficit in 10 months.

Exports in August totalled $34.71 billion, while imports amounted to $64.36 billion, resulting in a deficit of $29.65 billion.

For the April-August period, exports rose by just 1.14%, while imports increased by 7%.

Gold retreats on profit booking

Profit-taking at record highs has pushed down gold prices. The metal closed at $2570 per ounce yesterday and is trading at $2572 this morning. The December futures price reached $2599.

In Kerala, the price of gold fell by ₹120 per sovereign, reaching ₹54,920 on Tuesday.

Silver prices also dropped, with the metal trading at $30.43 per ounce.

The dollar index rose slightly to close at 100.89 on Tuesday, but it has dipped to 100.84 this morning.

The weaker dollar has bolstered the Indian rupee, which appreciated by 14 paise on Tuesday to close at ₹83.75 against the dollar.

Crude oil prices, after a period of gains, fell slightly this morning. Brent crude closed at $73.70 on Tuesday, and is trading at $73.47 this morning. wti crude is at $70.97, while uae’s murban crude is at $73.78.

Cryptocurrencies rise: Cryptocurrencies saw gains, with bitcoin climbing to $60,200. However, ether remains steady around $2360.

Industrial metals retreat on profit-taking: Industrial metals dipped slightly on profit booking. Copper prices fell by 0.25% to $9241.65 per tonne, while aluminium dropped by 0.18% to $2523.85. Nickel rose by 0.08%, while zinc, lead, and tin declined by 0.92%, 1.84%, and 0.15%, respectively.

Market Indicators (Tuesday, September 17)

        Sensex:  83,079.66(+0.11%)

• Nifty 50: 25,418.55 (+0.14%)

• Bank Nifty: 52,188.55 (+0.07%)

• Midcap 100: 60,180.75 (-0.13%)

• Smallcap 100: 19,465.55 (-0.37%)

• Dow Jones 30: 41,606.18 (-0.04%)

• S&P 500: 5634.58 (+0.03%)

• Nasdaq: 17,628.06 (+0.20%)

• USD/INR: ₹83.75 (-₹0.14)

• Dollar index: 100.89 (+0.13)

• Gold (ounce): $2570.00 (-$14.30)

• Gold (sovereign): ₹54,920 (-₹120)

• Crude oil (Brent): $73.70 (+$00.95)