The Fed rate cut tonight will be positive for EM flows on the back of a softer US dollar outlook."
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Indian stock markets opened on a positive note on Wednesday, supported by easing geopolitical tensions and optimism around a possible US Federal Reserve rate cut. Investors also took comfort from the first phone call between US President Donald Trump and Prime Minister Narendra Modi since June, which signaled improving relations.
The Nifty 50 index started the day at 25,276.60, gaining 37.50 points or 0.15 per cent, while the BSE Sensex opened at 82,498.97, up 118.28 points or 0.14 per cent. Market experts pointed out that optimism is building around India as trade talks with the US have resumed. A US trade team is currently in India, and discussions lasting over seven hours were described as "positive" by both sides. This is seen as a supportive factor for investor sentiment.
Ajay Bagga, Banking and Market Expert, told ANI that "Indian market futures are positive this morning, unlike the US and Asian markets, which are in wait-and-watch mode. Any US de-escalation of tariff rhetoric will be a sentiment booster for the Indian markets. The Fed rate cut tonight will be positive for EM flows on the back of a softer US dollar outlook."
Trump called Modi on Tuesday to wish him a happy birthday. Both leaders later posted warm messages on social media, reiterating their commitment to the Indo-US strategic partnership and efforts to end the Ukraine conflict. The broader indices on NSE also mirrored the gains, with the Nifty 100 opening 0.17 per cent higher, the Nifty Midcap 100 rising 0.32 per cent, and the Nifty Smallcap 100 advancing 0.38 per cent.
Sectoral indices on the NSE also opened in green. Nifty Auto gained 0.14 per cent, Nifty FMCG rose 0.29 per cent, Nifty IT was up 0.32 per cent, Nifty Media increased 0.34 per cent, and Nifty Metal added 0.32 per cent. Nifty Pharma edged up 0.04 per cent, while Nifty PSU Bank rose 0.21 per cent.
Globally, caution prevailed ahead of the Fed meeting outcome, which is around 15 hours away. While a rate cut is seen as almost certain, analysts noted that strong US retail sales and resilient inflation numbers make a jumbo cut less likely. However, with the Fed surprising markets before, such as its 50-bps cut in September 2024, nothing is being ruled out.
Asian markets were mixed in early trade on Wednesday. Japan's Nikkei 225 was marginally higher by 0.12 per cent, while Hong Kong's Hang Seng Index surged 1.48 per cent. In contrast, Singapore's Straits Times fell 0.3 per cent, Taiwan's Weighted Index slipped 0.42 per cent, and South Korea's KOSPI declined 0.98 per cent.
Meanwhile, oil prices edged higher amid concerns that Ukrainian attacks on Russian refineries and export hubs could reduce global supplies. Gold hovered near record levels, though experts expect some profit booking once the Fed resumes its rate-cut cycle. The dollar index weakened, while the euro, yen, and Swiss franc gained strength.
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