Indian stock markets opened flat on Wednesday as investors awaited the U.S. Federal Reserve meeting. This cautious start contrasted with rallies in other Asian markets, which surged on hopes of a rate cut. High valuations and weak corporate earnings growth have kept Indian equities restrained.
Market expert Ajay Bagga highlighted that Indian markets have shown strong performance since June 2024. The Nifty index rose over 5% in October, with foreign portfolio investor shorts dropping from 94% to 80%. This trajectory suggests Indian markets could surpass their September 2024 all-time highs in November.
However, Bagga cautioned that global markets priced to perfection pose medium-term risks. Liquidity, earnings, monetary support, and AI-driven gains are pushing global indices to record levels. This trend is expected to continue for at least another year.
Indian markets are now positioned to catch up and outperform after 13 months of underperformance. The lack of robust corporate earnings at high valuations has been a key restraint. Analysts anticipate this scenario will improve over the next six months as markets rally in anticipation.
In the U.S., markets extended their record-setting streak amid easing U.S.-China tensions. Expectations of further Fed rate cuts and strong earnings projections fueled the rally. Investors are keenly watching the Fed’s policy decision and commentary on labor markets and inflation.
The ongoing U.S. government shutdown, now in its fourth week, remains unresolved. This adds uncertainty to global economic sentiment, though it hasn’t dampened market optimism significantly.
Dhupesh Dhameja of SAMCO Securities noted the Nifty index ended October with nearly 5% gains. It maintained a bullish tone despite recent narrow trading ranges. The pattern of higher highs and higher lows confirms a strong uptrend.
On the corporate front, Orkla India’s IPO is set to open on October 29. Valued at Rs 1,667.54 crore, it’s entirely an offer for sale with a price band of Rs 695 to Rs 730 per share.
Key earnings releases today include Larsen & Toubro and Coal India. Other notable companies reporting results are Hindustan Petroleum Corporation and LIC Housing Finance.
Asian markets traded higher, buoyed by strong cues from Wall Street. Japan’s Nikkei 225 gained over 2%, while Taiwan’s Weighted Index rose 1.29%. South Korea’s KOSPI advanced 1.35%, though Singapore’s Straits Times Index remained flat.
The contrast between Indian and Asian market movements underscores regional divergences. While Asia soared on rate cut bets, India’s Sensex and Nifty held ground cautiously.
Investor focus remains squarely on the Fed’s verdict tonight. Commentary on inflation and economic outlook will shape near-term market directions. Any surprises could trigger volatility across global indices.
Corporate earnings and IPO activities add layers to market dynamics. As Orkla India’s offering begins, it will test investor appetite amid current conditions.
Overall, the Sensex and Nifty’s resilience points to underlying strength. With global factors in play, Indian markets are navigating a complex landscape.
The interplay of earnings, valuations, and Fed policies will determine the next moves. For now, the Sensex and Nifty exemplify cautious optimism in uncertain times.