Federal Reserve’s moderate tone may give a boost to Indian markets

4 May 2023 , 08:57 AM

Indian equity markets may give a boost today because of the change in hawkish stance of US Federal Reserve on interest rates. It raised interest rate by 25 basis points or 0.25%, yesterday. But said that further interest rate hikes will depend on data that comes. This was a marked departure from the assertiveness that more interest rate hikes are coming, that was seen in the previous monetary policy announcements of the US central bank.  Any further increases in US interest rates would have had a very adverse impact on Indian economy and the global economy.

US markets saw a weak closing yesterday.  Federal Reserve raised interest rate by 25 basis points. It has indicated that data will determine the decision regarding further interest rate hikes in the near future. Bond yield slipped to 3-month lows @ 3.33%. US dollar index hit 101 level. Oil prices slipped to lowest level in over 6 months. WTI crude hit $63.5 per barrel before recovering to close near $ 67 per barrel. 

Asian markets have opened on a mixed note today. Japanese ‘Nikkei’ is closed for holiday today. Most other markets are trading flat to mildly in the red.  Markets are factoring in no further rate hike on the anvil in US as the regional banks collapse leads to status quo for some time. Chinese stocks could do well. Manufacturing sector has rebounded sharply there.

 Nifty saw a much-needed correction yesterday. This also saw the dip getting bought as the index closed lower by 57, cutting losses of earlier in the day, by half. Banks led the pullback. Federal Bank, IDFC First, HDFC and Kotak led the gainers among banks .Hindustan Unilever, Asian paints & Tata Motor led the index gainers. Profit booking was seen in Adani Twins & ONGC.Mid-caps bucked the trend. Nifty Mid-cap 50 closed higher by 0.30%.

Technical View: Nifty is likely to find support at around 18050. 18350 is likely to act as resistance. Bank Nifty is likely to find support at around 43000. 43900 is likely to act as resistance on the upside.

Trading call:(1-14 days): BUY Hindustan Petroleum May future @256-259. Stop loss: 251.85. Target: 263.

Derivative call-time period: (1 months): BUY IOC May future @ 83-83.5. Stop loss: 81.6. Target: 85.