Commencing the trading day on a lower note, Indian equity indices sharply reversed their trajectory and traded with modest gains on Wednesday ahead of the US Federal Reserve’s policy decision and commentary.

The BSE Sensex was trading 227 points higher at 71,367. Nifty50 was trading at 21,549, up 78 points at around 10.14 am.

L&T shares fell 5% in early trade after the company missed the December quarter profit view and flagged rising logistics costs.

The Nifty Bank index fell 0.55% in early trade dragged by Kotak Bank, ICICI Bank and SBI. Nifty IT and Media also opened in the red, while Nifty Auto, FMCG, Metal, Pharma, Realty and Oil & Gas opened in the green.

The focus now will be on Fed Chair Jerome Powell’s post-meeting press conference, as well as any hints from policymakers on how soon the Fed could begin easing rates.

Data on Tuesday showed U.S. job openings unexpectedly increased in December, and data for the prior month was revised higher, pointing to a still-resilient labour market that is likely to give the Fed room to keep rates higher for longer.Experts View
“The Fed decision tonight and the interim Budget tomorrow will weigh on markets in the near-term. The first rate cut is likely to come in June 2024. The decline in the 10-year yield to 4.02% is positive since it will restrain FPI outflows,” said V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

“The domestic market will be focused on the interim Budget particularly on any proposals regarding taxation of investments relating to the capital market. Stock specific movements are likely in response to sectoral allocations in the Budget,” Vijayakumar said.

Mandar Bhojane, Choice Broking, said, “Analyzing the daily chart reveals the formation of a dark cloud cover, signaling a bearish outlook in the short term. The support level is identified at 21500, and a significant drop below this level may trigger a corrective phase in the market. Conversely, sustained trading above 21500 could pave the way for an upward movement.”

Global Market
Asian shares fell broadly on Wednesday, dragged by weak economic data from China while Wall Street equities were mixed overnight after strong US labour data added to doubts over early interest rate cuts.

China’s blue-chip index, which earlier this month sank to its lowest since 2019, was 0.7% lower on the day and down roughly 6% for January, marking its sixth straight monthly decline.

Hong Kong’s Hang Seng Index shed more than 1%, weighed down by property and tech names, and was on track for its worst January performance since 2016.

FII/DII Tracker
Foreign institutional investors net sold shares worth about Rs 1,971 crore on Tuesday, exchange data showed. Domestic institutional investors remained net buyers, adding shares worth Rs 1,003 crore.

Oil Prices Fall
Oil prices edged off in early Asian trading on Wednesday on continued bearish fundamentals, following gains in the previous session amid an escalating conflict in the Middle East.

The March Brent crude futures, which expires today, fell 37 cents to $82.50 a barrel by 0146 GMT. The more actively-traded April contract fell 24 cents to $82.26 a barrel. U.S. West Texas Intermediate crude ticked down 18 cents to $77.64.

Currency Watch
The Indian rupee fell 2 paise to $83.12 against the US dollar in early trade, weighed by a rise in the U.S. dollar after robust U.S. labour market data made it less likely the Federal Reserve will cut interest rates in March.

The dollar index, which tracks the movement of the greenback against a basket of six major world currencies, surged 0.21% to 103.61 level.

(With inputs from agencies)

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