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Benchmark stock market indices opened Wednesday’s trading session on a positive note ahead of the US Federal Reserve’s rate decision later in the day.
The S&P BSE Sensex was up 27.55 points to 83,107.21 at 10:23 am, while the NSE Nifty50 rose 0.90 points to trade at 25,419.65.
Most of the other broader market indices weakened during early trade as investor remained cautious, reflected by a sharp increase in volatility.
Information technology stocks saw significant declines ahead of the US Fed’s rate decision, while banking and financial stocks gained.
The top five gainers on the Nifty50 were Bajaj Finance, Hero MotoCorp, Shriram Finance, Bajaj Finserv and HDFC Bank.
On the other hand, the top losers were Tech Mahindra, Infosys, Wirpo, TCS and LTIM.
Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said, “The significance of the Fed rate decision expected tonight is evident from the wait and watch market mood across the globe yesterday. Perhaps more important than the Fed action would be the Fed commentary and the message.”
“An ideal and possible outcome would be a 25 bps rate cut with a dovish message indicating a series of rate cuts. Good retail sales data along with a weakening labor market point to such a possibility,” he noted.
Vijayakumar also added that India’s August trade data indicated stagnant exports and rising imports.
“The consequent rising trade deficit can weaken the INR, if the trend persists. This means exporters like IT will benefit. Pharma, Chemicals and Textile exporters too will benefit,” he said.
“The time is favourable for reducing the exposure to mid and small caps and increasing the exposure to largecaps. This strategy will play out well in the medium to long run.”
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