Trade Setup For Sept 19: Nifty Faces Hurdle At 25,500 After Half-A-Point Fed Cut
China's central bank and the Bank of England will also announce their rate decision on Thursday.
The NSE Nifty 50 faces hurdles at the 25,500 level as the equity market shifts focus towards the US Federal Reserve's 50 basis points interest cut, analysts said.
The Federal Open Market Committee lowered the rate for the first time in more than four years to 4.75-5% on Thursday. Dot plot of Fed officials' commentary now expects to lower rates by one percentage point by year-end.
On the downside, 25,280–25,300 serves as an immediate support base for Nifty, followed by the 21-double exponential moving average support, which is placed near 25,080 levels, said Hrishikesh Yedve, assistant vice president of technical and derivatives research at Asit C. Mehta Investment Intermediates Ltd.
As long as Nifty stays above 25,080, a buy-on-dips strategy is advisable, with the potential for the index to test 25,600 in the short term, he added.
According to Yedve, the index formed a "spinning top candle" on a daily scale near its all-time high, signalling some short-term hesitation. "Therefore, on the upside, 25,500 will act as an immediate hurdle for Nifty."
If the index sustains above 25,500, it could test the 25,600 levels, he added.
The equity market may witness profit booking if the Fed slashes the lending rate by only 25 basis points, said Siddhartha Khemka, head of research in wealth management at Motilal Oswal Financial Services Ltd. The rate cut announcement by the Fed is scheduled later on Wednesday.
"However, a 50 bps rate cut by the Fed could bring some cheer to market sentiments. Also, Fed commentary will be important as it will give clarity on the quantum and duration of the rate cut cycle," he said.
China's central bank and the Bank of England will also announce their rate decision on Thursday, which is expected to follow the Fed’s move, Khemka pointed out. "Hence, we expect the market to remain volatile in the near term with rate-sensitive sectors in focus."
Bank Nifty, which formed a strong bullish candle on a daily scale, will encounter short-term resistance near the psychological level of 53,000, Yedve said. If Bank Nifty sustains above this level, the rally could extend towards 53,500-53,800, he added.
"On the downside, 52,000 and 51,700 will serve as support points. Thus, a buy-on-dips strategy should be adopted in Bank Nifty for the short term," he noted.
The GIFT Nifty, an early indicator of the Nifty 50 Index’s performance in India, was up 72.5 or 0.29% at 25,427.5 as of 06:30 a.m.
Market Recap
The benchmark equity indices snapped two sessions of gains and ended lower on Wednesday amid caution as markets await the much-anticipated interest rate cut in the US. India VIX, an indicator of volatility, closed 6.2% higher at 13.37.
The NSE Nifty 50 ended 41 points or 0.16%, lower at 25,377.55, and the S&P BSE Sensex ended 131.43 points or 0.16%, lower at 82,948.23. Intraday, both the Nifty and the Sensex rose as much as 0.3% to hit their new record highs of 25,482.20 and 83,326.38, respectively.
There was no trading in money markets, government securities, rupee interest rate derivatives, or foreign exchange markets as the Maharashtra government notified a holiday on Wednesday for Eid-e-Milad.
F&O Cues
The Nifty September futures were down by 0.21% to 25,396 at a premium of 19 points, with open interest down by 3.43%.
The Nifty Bank September futures were up by 0.81% to 52,757 at a premium of 7 points, while its open interest was down by 4.97%.
The open interest distribution for the Nifty 50 Sept. 19 expiry series indicated most activity at 26,000 call strikes, with 25,000 put strikes having maximum open interest.
For the Bank Nifty options expiry on Sept. 18, the maximum call open interest was at 53,000 and the maximum put open interest was at 52,000.
FII/DII Activity
Overseas investors stayed net buyers of Indian equities for the second consecutive day on Wednesday. Foreign portfolio investors mopped up stocks worth Rs 1,153.7 crore, according to provisional data from the National Stock Exchange.
Domestic institutional investors stayed net buyers for the fifth consecutive session and purchased equities worth Rs 152.3 crore, the NSE data showed.
Major Stocks In News
Nazara Technologies: The company will raise up to Rs 900 crore via preferential issue of shares at an issue price of Rs 954.27 apiece. It also received the board's nod to acquire 19.35% stake in subsidiary Absolute Sport (Sportskeeda) for Rs 145 crore.
Power Grid: The company was declared as a successful bidder for an inter-state transmission project in Rajasthan and Madhya Pradesh.
Macrotech Developers: The company will acquire Ivanhoe Warehousing India Inc.'s stake in three digital infrastructure entities in Maharashtra for Rs 240 crore.
BL Kashyap: The company secured a new order worth Rs 221 crore from SSS Realty & Co. for construction work in Bengaluru. The total order book currently stands at Rs 3,546 crore.
Ireda: The Department of Investment and Public Asset Management has allowed dilution of up to 7% government holding via a qualified institutional placement.
Garden Reach Shipbuilders & Engineers: The company received a $54 million contract from Germany's Carsten Rehder for four multi-purpose vessels.
GE T&D India: The company's promoters will sell up to 15.6% stake via an offer for sale on Sept. 19 and 20. The floor price for the OFS has been set at Rs 1,400 per share, which marks a discount of nearly 21% from the current market price.
ION Exchange: The company received a Rs 161-crore order from Adani Power for water and environment management solutions.
Aditya Birla Capital: The company received no objection from the RBI for proposed amalgamation of Aditya Birla Finance Ltd. with itself.
ICICI Securities: Another shareholder filed an appeal before the NCLAT in the delisting case.
Lemon Tree Hotels: The company signed a pact for a new 44-room hotel in Andhra Pradesh.
Zomato: It received a demand order of Rs 17.7 crore from the West Bengal assistant commissioner of revenue for alleged non-payment of goods and services tax on delivery charges.
Nippon Life India: The company approved the appointment of Parag Joglekar as the chief financial officer, effective Sept. 19.
Dish TV: The company approved the appointment of Amit Verma as the CFO with effect from Oct. 1.
Pudumjee Paper: The company awarded the contract for 15.4 MW solar power project to Prozeal Green Energy.
Global Cues
Traders lined up bets to send Asian stocks higher after the US Federal Reserve slashed key rates by 50 basis points, signalling further policy easing but without a rush.
The Japanese stocks led the advance with the Bank of Japan's rate cut decision due on Friday. S&P ASX 200 was up 0.51% at 8,183, while Nikkei was up 2.31% at 37,197 as of 6:00 a.m.
The Federal Open Market Committee lowered the rate for the first time in more than four years by 50 basis points to 4.75-5.00% on Thursday. The big cut was as per expectations as traders weighed on deeper cuts just ahead of the decision.
Dot plot of Fed officials' commentary now expects to lower rates by one percentage point by year-end, implying two more quarter-point cuts or one larger, half-point cut.
Meanwhile, following the Fed's cut, Hong Kong's monetary authority cut its base interest rate for the first time since 2020. Bank of England and Taiwan's interest rate decision is due on Thursday while Australia and Hong Kong will release unemployment print during the day.
The S&P 500 and Nasdaq Composite slid 0.29% and 0.31%, respectively. The Dow Jones Industrial Average declined by 0.25%. Treasury 10-year yield advanced six basis points to 3.7%.
Key Levels
US Dollar Index at 101.09.
US 10-year bond yield at 3.72%.
Brent crude down 0.46% at $73.31 per barrel.
Bitcoin was up 3.16% at $62,136
Gold spot was down 0.07% at $2,557.23.
