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Informist, Wednesday, Jul 31, 2024

By Alina Geogy

MUMBAI – The outcome of the US Federal Reserve's policy meeting, due later today, is expected to lend direction for investors in the domestic equity market Thursday. The central bank is expected to keep its benchmark interest rate steady today. They await the corporate earnings of major companies, which will lend more cues to investors. Meanwhile, some analysts are of the view that any fall is considered a buying opportunity and major gains could be taken as a chance to book profits. 

"Market reactions to the US Fed meeting outcome will be evident in early trades on Thursday', Ajit Mishra, senior vice-president of research at Religare Broking, said in a note. "Indications suggest that the current market tone will persist", he said.

Market watchers await the policy decision and the Chair Jerome Powell's media address for clues about future rate cuts. There is a 97% probability of the US Fed keeping rates unchanged this time, as per data from the CME FedWatch Tool. Meanwhile, there is a nearly 88% probability of a cut in rates at the September meeting.

The resistance for the Nifty 50 is pegged at 25000 points while support is pegged at 24600 points. Today, the Nifty 50 and Sensex closed 0.4% higher each at their respective fresh closing highs of 24951.15 points and 81741.34 points, respectively. Though the trend in the market is bullish, investors should avoid taking long positions in the upcoming sessions, Jigar Patel, senior manager of equity research at Anand Rathi Shares & Stock Brokers, said.

Market participants will also gauge the sales data from automobile manufacturers for July, which will be released Thursday, This data will throw light on the performance and sales of various key players in the sector.

When it comes to the banking stocks, analysts said the sector is likely to move sideways. Shares of ICICI Bank and State Bank of India topped out, while those of Axis Bank and HDFC Bank which were weak after dismal Apr-Jun earnings, are expected to have a bouceback, Patel said. The Nifty Bank index has been inching up, and ended higher for the fourth straight session at 51553.40 points today. The index may face resistance at 52000 points and find support at 50500 points, according to analysts at various broking firms.

The power and pharmaceutical stocks may undergo some profit booking as they were among the top gainers today, Patel said. The information technology sector may also see some selling pressure next week, he said. "With key sectors, except banking, contributing to the momentum, traders should focus on selecting quality stocks and utilise any market dips for accumulation", Mishra of Religare Broking added in the note.

On the earnings front, five companies which are part of the Nifty 50 will release their results on Thursday. Of these, fast moving consumer goods company ITC is expected to report strong earnings for the quarter ended June owing to an uptick in the performance of its consumer goods and hotels businesses. Drugmaker Sun Pharmaceutical Industries is also expected to report on-year growth in key earnings metrics for Apr-June aided by robust growth in the company's specialty pharmaceuticals business. Automaker Tata Motors may report a sharp expansion in net profit for the quarter, propped by higher sales of Jaguar Land Rover and commercial vehicles, a richer product mix, and lower raw material costs. Adani Enterprises and Adani Ports and Special Economic Zone are also expected to release their Apr-Jun earnings.  End

Edited by Deepshikha Bhardwaj

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