The Indian stock market has experienced a significant rally recently, with the Nifty 50 and Bank Nifty showing considerable consolidation today after a gap-up opening. As global and domestic market conditions continue to evolve, investors and traders are left wondering whether the Nifty 50 will Bounce Back to 25,500 and Bank Nifty surpass 56,000 after the Fed Rate Cut.
In today’s trading session, both the Nifty 50 and Bank Nifty opened with a gap-up, indicating positive sentiment at the start. However, as the session progressed, both indices were trading sideways, almost inside the first 15 minutes candle, leading to a decay in option premiums of both Bank Nifty and Nifty.
Index Overview
The Nifty Index opened at Rs. 25,441.05 with a gap-up opening from its previous close of Rs. 25,330.25. The index reached a high of Rs. 25,448.95, trading almost near the 25,500 level.
The BankNifty Index opened at Rs. 55,797.10, with a gap-up opening from its previous close of Rs. 55,493.30. The index reached a high of Rs. 55,835.25, trading almost near the 56,000 level.
How will a 25 bps US Fed rate cut impact the Indian stock market?
The benchmark equity indices Nifty and Banknifty opened on a firm note on Thursday, supported by gains in IT and banking stocks after the US Federal Reserve cut its key policy rate by 25 basis points and signalled the possibility of further reductions this year.
Increased Foreign Institutional Investor (FII) Inflows
Lower US interest rates reduce the returns on US bonds, prompting global investors to look for better yields in emerging markets like India. This could lead to higher FII inflows into Indian equities, especially in sectors like banking, IT, and infrastructure.
Strengthening of the Indian Rupee (INR)
A US rate cut can weaken the dollar, leading to a relative strengthening of the Indian rupee. A stronger INR makes imports cheaper (good for inflation) and improves the profitability of companies reliant on imported goods.
Positive Sentiment in Global Stock Markets
When the US Fed cuts interest rates, it shows that it wants to support the economy by making borrowing cheaper. This usually creates a positive mood in stock markets around the world. Since Indian markets are connected to global trends, they often go up when other major markets are doing well.
Outlook on Nifty and Banknifty
According to the charts, the significant rally in the market is expected to continue as the Nifty 50 holds its current levels. The major support is around 25,150, followed by the round number 25,000, while resistance is visible near the 25,500 mark, with a major resistance around 25,650.
The Bank Nifty needs to sustain above the 55,500 mark for the rally to continue. If the index falls below this level, the next support is around 55,300, followed by a major support at 55,000. On the upside, the next resistance is at the 56,000 level, and if that is surpassed, the index may move up to the next resistance at 56,700.
Written by Sridhar J
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