Stock market today: Sensex, Nifty strategy as US Fed cuts rate by 50 bps

Market today: Apart from the reaction to the US Federal Reserve's 50 bps rate cut, investors will focus on the last day of Northern Arc, Arkade Developers, and Western Carriers IPO

Market today: Indian benchmark indices-- Sensex and Nifty-- are likely to open positive after hitting new record highs in the previous session as they digest a 50-basis point rate cut by the US Federal Reserve.

At around 6:57 AM, GIFT Nifty futures were up 13.4 points at 25,409.5.

Late on Wednesday, the Federal Open Market Committee (FOMC) cut its policy rate by half a percentage point to a target range of 4.75 per cent to 5 per cent.

The decision, Fed Chair Jerome Powell said, was taken "in light of the progress on inflation and the balance of risks", with the FOMC judging that "the risks to achieving its employment and inflation goals are roughly in balance". Powell justified the outsized cut as the Fed's "commitment to not being behind the curve".

 

That said, while the US markets, first, rejoiced and leaped to fresh record highs, the indices ended lower as Jerome Powell said the first rate cut doesn't imply a similar pace ahead.

At close, the Dow Jones was down 0.25 per cent, followed by the S&P 500, which declined 0.29 per cent. Similarly, the Nasdaq Composite lost 0.31 per cent.

Asian markets performance today

The Asia-Pacific markets traded mixed reactions to the policy decision. At the last count, ASX 200 gained 0.11 per cent, and Nikkei was up 2.16 per cent. Meanwhile, Kospi was down 0.51 per cent, Hang Seng was unchanged, whereas Shanghai was flat with a negative bias.

Global triggers

Globally, the major trigger on the radar will be the Federal Reserve's policy decision of cutting 50 bps. Apart from that US will release several macroeconomic data, among others Philadelphia Fed Manufacturing Index for September, initial jobless claims for September, and existing home sales data for August.

In the Asia Pacific markets, Taiwan's central bank's policy decision will be eyed.

Back home, India’s exports to China witnessed a 22.44 per cent contraction to $1 billion, while overall exports declined 9 per cent at $34.7 billion in August, commerce department data showed. China is India’s fifth-largest export market. Dependency on China continued, with the country being India’s largest import partner.

According to the data, inbound shipments from China stood at $10.8 billion, up 15.5 per cent year-on-year (Y-o-Y).

Crude oil check

On the commodity front, last seen, Brent crude futures were down 0.35 per cent to $73.39 per barrel.

Here's how analysts view today's (September 19) trading session

Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities
 

A small negative candle was formed on the daily chart with upper and lower shadows, which indicates high volatility in the market. An attempt at a downside breakout of the narrow range movement of the last three sessions could be in the place of a false downside breakout. Further upmove from here could confirm the same. Thursday's US Federal meeting with regard to the interest rate cut could possibly impact Friday's market opening on either side.

The short-term trend of Nifty remains positive with range bound action. Any dips down to the support of 25,200-25,100 is expected to be a buying opportunity. A decisive upmove above 25,500 levels could pull Nifty towards the higher targets.

Rupak De, Senior Technical Analyst, LKP Securities
 

Lately, Nifty has been moving within a small range. On the downside, there is support at 25,300. If Nifty falls below this level, it could lead to a further drop towards the 24,900-25,000 range. On the upside, 25,500 is acting as a resistance level, meaning it may be difficult for the market to move above this point in the short term.

Aditya Agarwal, Head of Derivatives and Technical at Sanctum Wealth
 

Nifty saw profit booking ahead of Fed policy and closed below 25,400 levels. On the higher side, aggressive call writing has been seen at the 25,500 strike option and that will act as stiff resistance for Nifty and move towards those levels can be used to book profit in trading long positions. On the lower side, 25,250 will act as strong support for the index, and below that it can correct towards 25,100 levels.

Overall, the structure for Nifty Bank looks positive and it can test its previous all time high of 53,350 in this move. On the lower side, 52,400-52,150 will act as immediate support, and dips towards those levels can be used to initiate fresh long positions.

IPO watch today: Northern Arc Capital, Arkade Developers, Western Carriers (India) and others in focus

Mainboard IPOs: 
 

Northern Arc Capital IPO, Arkade Developers Ltd IPO, and Western Carriers (India) Ltd IPO will close for subscription today.

NSE, BSE SME IPOs:
 

Kalana Ispat Ltd IPO will open for subscription on NSE SME today.

Osel Devices Ltd IPO, Pelatro Ltd IPO, Envirotech Systems Ltd IPO, and Deccan Transcon Leasing Ltd IPO will close for subscription today on NSE SME.

Popular Foundations Ltd IPO will close for subscription today on BSE SME.

Meanwhile, shares of Excellent Wires and Packaging Ltd will be listed on NSE SME today.

FII, DII update: How much did FIIs, and DIIs buy or sell on September 18?

As per NSE data, Foreign Institutional Investors (FII) were net buyers of Indian equities worth Rs 1,153.69 crore. 

Likewise, the DII's were net buyers of equities worth Rs 152.31 crore.

Indian markets on Wednesday:

Benchmark equity indices, the BSE Sensex and NSE Nifty50 retreated from record high levels to settle in the red on Wednesday. The BSE Sensex shed 131.43 points or 0.16 per cent to settle at 82,948.23. The index had hit a fresh high level of 83,326.38 during intra-day trade on Wednesday. Meanwhile, the NSE Nifty also scaled a record high level of 25,482.20 before ending Wednesday's session at 25,377.55, down 41 points or 0.16 per cent from its previous close.