Indian Shares Poised for Flat Open as Global Rally Pauses

Indian shares are anticipated to commence trading with minimal changes on August 23, 2024, as the global equities rally takes a breather. Investors are keenly awaiting Jerome Powell's address, seeking confirmation of a potential U.S. interest rate reduction in September.

The GIFT Nifty, a derivative of the Nifty 50 index traded on the NSE International Exchange, was observed at 24,841.5 at 08:04 a.m. IST. This suggests that the NSE Nifty 50 is likely to open near its previous close of 24,811.5 on August 22.

India's benchmark indices, the Nifty 50 and S&P BSE Sensex, have recorded gains for six consecutive sessions, each adding approximately 2.8%. This upward trend has been fueled by increasing expectations of a U.S. rate cut in September and sustained domestic capital inflows.

Two traders have noted that while the short-term outlook for Indian markets remains positive, some profit-booking may occur. They suggest that selling during rallies could be an effective strategy to capitalize on the recent upswing, potentially keeping the markets within a narrow range.

Asian markets experienced a decline, with the MSCI Asia ex-Japan index, which tracks large and mid-cap representation across Asian markets excluding Japan, dropping by 0.5%. Similarly, Wall Street equities closed lower as sentiment turned cautious ahead of Jerome Powell's speech at Jackson Hole, Wyoming, scheduled after Indian market hours on August 23.

Market participants are anticipating a rate cut in September, based on recent economic data, minutes from the Federal Reserve's latest policy meeting, and dovish commentary from Fed officials. The Federal Reserve, under Powell's leadership since 2018, plays a crucial role in shaping U.S. monetary policy.

Foreign institutional investors (FIIs) reversed their selling trend after three sessions, acquiring a net 13.72 billion rupees ($163.5 million) worth of shares on August 22. Concurrently, domestic institutional investors (DIIs) continued their buying streak for the 14th consecutive session, purchasing shares valued at 29.72 billion rupees.

Several stocks are likely to attract attention:

• Bharat Electronics: Secured orders worth 6.95 billion rupees for combat management systems.
• Hindalco Industries: Plans to invest $10 billion to expand its India business and Novelis operations.
• Zomato: Discontinues its intercity food-delivery service due to challenges in achieving product-market fit.

As the Indian stock market navigates these developments, investors will be closely monitoring global cues and domestic factors influencing market sentiment.

"The current market scenario presents a delicate balance between optimism from recent gains and caution ahead of key economic signals. Investors should remain vigilant and consider a balanced approach in their trading strategies."