What’s going on here?
Indian shares are on their longest rally of 2024, climbing for the seventh session in a row on August 23. But gains have slowed as investors turn cautious ahead of Federal Reserve Chair Jerome Powell’s upcoming speech.
What does this mean?
The NSE Nifty 50 Index edged up 0.05%, closing at 24,823.15, while the S&P BSE Sensex rose 0.04%, reaching 81,086.21. Over the past seven sessions, these indices have risen about 3%, driven by hopes of US rate cuts and strong domestic inflows. The second day saw a notable boost, thanks to easing US recession fears. Despite the generally positive outlook, investor caution reflects uncertainty about whether the Federal Reserve will take a dovish turn or stick to a more reserved approach.
Why should I care?
For markets: Caution before the storm.
Asian markets remained largely stable, while European markets saw modest gains as they awaited Powell’s speech, set to occur after Indian market hours. A US Federal Reserve rate cut in September seems almost certain, although expectations of a significant 50-basis-point cut have waned. A dovish Powell could divert foreign inflows to India, potentially driving markets to new highs.
For you: Navigating market shifts.
The US rate-sensitive IT index fell 1% on the day, highlighting market sensitivity to Fed decisions. On the Indian front, auto giants TVS Motors and Bajaj Auto gained 2.24% and 4.97% respectively, after J.P. Morgan named them top picks. Meanwhile, Reliance Infrastructure, Reliance Home Finance, and Reliance Power dropped 5%-10% following a market ban on Chairman Anil Ambani and 24 others due to allegations of fund diversion.
