Gift Nifty at 24,268 indicates a downward bias for Nifty at open on Wednesday. However, Gift Nifty has been volatile as the US election results start trickling in. Analysts expect the market to remain volatile. According to them, the recent trading pattern indicates that India is isolated from global markets with FPIs selling relentlessly. The weaker-than-expected performance from India Inc in Q2 added to the negative sentiment.
India VIX, the key indicator of market volatility, decreased by 3.39 per cent, closing at 16.12. With the VIX still hovering around a nine-week high and above the 15-mark, caution remains prevalent as high volatility tends to attract selling interest, said Dhupesh Dhameja, Technical Analyst, SAMCO Securities. The put-call ratio (PCR) has dipped from 0.79 to 0.67, reinforcing the cautious sentiment. Currently, the “max pain” level is situated at 23,900, likely playing a pivotal role in influencing the index’s movement, he added.
Early trends indicate Donald Trump is leading. The focus will now shift to the upcoming US Federal reserve meeting on Thursday said analysts.
“There is speculation that Trump might win the upcoming US election, and the Federal Reserve could cut interest rates by 0.25 per cent for a second time,” said Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd.
Meanwhile, Asian stocks are mixed. Japan’s Nikkei, Korea’s Kospi, are up, even as the Taiwan and Hong Kong markets are down.
Shrisha Acharya, Vice-President, Anand Rathi Global Finance, said: “The US presidential elections have always been the apple of the financial world’s eye; even now, it has caught the spotlight while creating all the buzz in financial markets, with potential outcomes shaping divergent paths for both bonds and equities. For instance, the Trump card, coupled with potential Republican control, could shoot higher yields due to anticipated increases in deficit spending, inflation risks, and potential tax cuts. This could jiggle the confidence in US Treasuries and, thus, start a chain effect that will possibly impact global market stability, leading to short-term volatility.
On the other hand, Harris’ rise has been met with a stock market rally glued on expectations of economic stability and controlled inflation, with more predictable fiscal policy likely to help in a soft landing. In any case, a contested election, which remains probable, could extend market uncertainty, magnifying volatility across the equity and bond market until the winner stands tall. Nevertheless, market participants will have to keep a close watch on both Fed policy, which is due on Thursday, and fiscal approaches, as these will dominate the longer-term inflation, growth trajectories, and the potential for rate adjustments to stabilise inflation and boost growth.
