Markets likely to get positive start following US Federal Reserve’s decision

Indian markets retreated from record high levels and settled in the red on Wednesday, as traders opted to book some profits at higher levels, with IT stocks posting their sharpest drop in over six weeks. Today, markets are likely to get positive start following the US Federal Reserve’s decision to cut policy rates by a widely expected 50bps. 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. Foreign fund inflows likely to aid sentiments. As per NSE data, Foreign Institutional Investors (FII) were net buyers of Indian equities worth Rs 1,153.69 crore. Sentiments will get boost as net direct tax collection grew 16.12 per cent to over Rs 9.95 trillion so far this fiscal on higher advance tax mop up. Refunds worth over Rs 2.05 trillion were issued, a 56.49 per cent jump over the same period last fiscal. Some optimism will come as Commerce and Industry Minister Piyush Goyal expressed optimism that India's merchandise and services exports will surpass USD 825 billion despite facing global economic challenges. Traders may take note of Finance Minister Nirmala Sitharaman’s statement that India is standing out globally in terms of economic growth and will continue to do so in the next few years. However, there may be some cautiousness as State Bank of India (SBI) chairman C S Setty said that the Reserve Bank is unlikely to ease the benchmark policy rate during 2024 given the uncertainty over food inflation.  There will be some buzz in fertilizer industry stocks as the government approved Rs 24,474.53 crore subsidy on phosphatic and potassic (P&K) fertilisers for the rabi season of 2024-25 to ensure supply of crop nutrients to farmers at affordable rates. The subsidy would be provided to the fertilizer companies as per approved and notified rates of N (nitrogen), P (phosphorus) and K (potash) so that fertilizers are made available to farmers at affordable prices. Pharmaceutical stocks will be in focus as a report by CRISIL Ratings stated that the Indian pharmaceutical sector is expected to see revenue growth of 8-10 per cent this financial year, driven by strong exports to regulated markets such as the US and Europe, a recovery in semi-regulated markets including Africa and Asia, and consistent domestic demand. There will be some reaction in diamond sector stocks as think tank GTRI said India's diamond sector is facing a severe crisis as both imports and exports have sharply declined in the past three years, which has triggered defaults, factory closures, and widespread job losses. Meanwhile, Northern Arc Capital IPO, Arkade Developers IPO, and Western Carriers (India) IPO will close for subscription today.

The US markets ended lower on Wednesday after the U.S. Federal Reserve opted for a supersized cut in its first move to borrowing costs in more than four years. Asian markets are trading mostly in green on Thursday as traders assessed the Federal Reserve’s decision to cut interest rates by a half-percentage point.

Back home, Indian equity benchmarks ended marginally lower on Wednesday, dragged by losses in IT, TECK and Healthcare stocks. Markets made a cautious start as investors reacted to disappointing trade data. According to data released by Commerce & Industry Ministry, India's trade deficit widened to a 10-month high of nearly $30 billion in August as gold-led merchandise imports surged to over $64 billion and merchandise exports declined. Exports contracted for the second month in a row to $34.7 billion due to softening of oil prices and muted global demand. However, the markets soon rebounded and hit fresh record highs in afternoon deals, amid foreign fund inflows. The foreign institutional investors (FIIs) bought equities worth Rs 482 crore on September 17. Traders took support with a private report that the Centre’s direct tax collection collections, net of refunds, rose about 16% on year to Rs 9.92 lakh crore till September 15, 2024 in the current financial year. The direct tax receipts till September 15 were 45% of the FY25 target of Rs 22.07 lakh crore, broadly in line with annual trends. Adding to the optimism, Crisil Ratings said that the recent developments in Bangladesh did not have a significant impact on India's trade and it does not foresee any near-term impact on the credit quality of India Inc. Traders took a note of report that India and the UK are expected to hold the next round of talks for a proposed free trade agreement in October to resolve the pending issues and close the negotiations. But markets retreated from record high levels to settle in the red, as investors booked profit ahead of the Federal Reserve's interest rate decision later in the day. Finally, the BSE Sensex fell 131.43 points or 0.16% to 82,948.23, and the CNX Nifty was down by 41.00 points or 0.16% to 25,377.55.