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Informist, Wednesday, Aug. 20, 2025

 

By Gopika Balasubramanium

MUMBAI – Domestic equity indices are seen rising Thursday as market sentiment improved following the government's goods and services tax reforms to improve consumer spending in the second half of the current financial year. There is an optimism in the market around improved diplomatic relations between China and India. Investors will also track minutes of the US Federal Open Market Committee's July meeting.

 

"In the next two or three weeks, or even before that there is a possibility that the Nifty can reach 26000 points," said Brijesh Ail, senior technical analyst at IDBI Capital Markets & Securities. For this week, the 50-index is seen taking support at 24500 and facing resistance at 25200 points. Short covering from foreign investors in the coming sessions ahead of the expiry of monthly futures and options due next week will also lift the market higher, Ail said. 

 

"We look through the weak Apr-Jun and see the earnings trajectory changing from Oct-Mar as the consumption cycle accelerates," Emkay Global Financial Services said in a note. "The GST reform is a long-term growth accelerator and we see it as a strong rerating trigger, as the long-term earnings positives will take some time to seep through," the broking firm said.

 

The brokerage sees growth in the June quarter to be bottomed out, with earnings projected to improve in the upcoming quarters. "We also see this as the bottom of the earnings cycle and expect steady improvement from here, in both quarterly growth and forwards forecasts. Discretionary (autos) is the best way to play the recovery, and we remain overweight on industrials also," the brokerage said. However, it is underweight on financial services and technology sectors.

 

On Wednesday, the Nifty 50 closed at 25050.55 points, up 69.90 points or 0.3%. The index closed above 25000 points for the first time since Jul. 24. The index had crossed 25000 points Monday and Tuesday as well but failed to close above it. The BSE Sensex closed at 81857.84 points, up 213.45 points or 0.3%. 

 

Ajit Mishra, head of technical research at Religare Broking, has a positive bias on the Nifty 50 and said upside will likely be capped as the index will face strong resistance at 25100 points. "A break above the same can help (Nifty 50) to inch towards 25250 points," Mishra said. Mishra expects short-covering by investors in the Nifty 50 cash market above 25000 points.

 

Market participants will eye minutes of the US Federal Open Market Committee's July meeting. Two governors on the panel had voted against holding rates steady in July. Investors were cautious on the interest rate scenario, especially ahead of the US Federal Reserve Chairman Jerome Powell's comments at the Jackson Hole due later in the week. Any indication on a rate cut by US FOMC in the September meeting will be keenly watched for. At present, the federal funds rate is at 4.25-4.50% and CME FedWatch tool shows an 84.9% probability of 25-basis-point-cut by the committee.   End

 

Edited by Subhojit Sarkar

 

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