Bears are likely to tighten their grip further, as global markets continue to reel under pressure post Fed’s hawkish stand. Analysts expect the downward pressure is likely to continue and will extend to mid -and small-cap space too, which until now is relatively resilient. Gift Nifty at 19660 indicates a gap down opening of about 100 point for Nifty, as Nifty futures closed at 19,779 on the NSE.

JPMorgan index

However, India’s inclusion into JPMorgan Government Bond Index bodes well for the country and markets. According to analysts. In a statement on Thursday the global financial intermediary said that it add the Indian securities to the JPMorgan Government Bond Index-Emerging Markets starting June 28, 2024. The South Asian nation will have a maximum weight of 10 per cent on the index, according to a statement Thursday. Analysts at HSBC Global estimate about $30 billion inflow into the country.

According to analysts, this will not not only lead to inflow into bond market and but also stabilise Indian equity markets.

FPI selling

However, in the short-term, equity market is likely to remain under pressure, amid FPI selling. FPIs on Thursday offloaded shares worth over Rs 3,000 crore. Experts believe that the selling will continue as dollar turned strong due to strong US economic activity and the recent’s Fed decision

Vivek Goel, Co-founder and Joint Managing Director, Tailwind Financial Services, said:“The outcome from the latest US Fed meeting was in line with market expectations with the policymakers announcing a pause but not an end to the rate hike cycle.”

“The messaging from the Fed chair Powell was the trigger for equities markets to turn red. He continued to maintain a hawkish stance towards inflation and warned against easing off from the current stance too early. The dot plot released highlighted the consensus view among policymakers of another rate hike this calendar year before a longer than expected pause and slower pace in cutting rates. This also indicates the belief in the strength of the US economy with ability to maintain tighter policy stance for longer,” he added.

Global equities sank on Thursday and the dollar advanced after the US Federal Reserve indicated it could hike interest rates again this year and keep them elevated longer than feared as it struggles to bring inflation under control, said Deepak Jasani, Head of Retail Research, HDFC Securities.

According to Ajit Mishra, SVP - Technical Research, Religare Broking Ltd, Nifty has tested the short-term moving i.e. 20 EMA and also retraced almost fifty percent of the recent up move. It may take a breather now but the upside seems capped citing the underperformance of select heavyweights. We thus recommend staying stock-specific with a focus on risk management.  

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