India’s GDP Growth to Guide the Direction, FPIs Build Heavy Short Positions

The major US indices bounced back and forth across the unchanged line before eventually closing moderately higher. Early buying interest was generated in reaction to news that a federal court blocked President Donald Trump’s “reciprocal tariffs” on imports from U.S. trade partners from going into effect. The Court of International Trade ruled Trump overstepped his authority to impose the tariffs by invoking emergency economic powers.

A positive reaction to earnings news from Nvidia also contributed to initial strength on Wall Street, with the AI darling jumping by 3.2 percent on the day. The jump by shares of Nvidia came after the company reported fiscal first quarter results that exceeded analyst estimates on both the top and bottom lines. U.S. stock index futures fell on Thursday evening after an appeals court reinstated most of President Donald Trump’s sweeping trade tariffs, while gains in Nvidia and tech stocks petered out after a strong rally.

Trading on Friday may be guided by reaction to Commerce Department report that includes the Federal Reserve’s preferred readings on consumer price inflation. Japan’s May inflation remained at 3.4% headline but core CPI jumped to 3.6%, a two-year high. Its industrial production fell 0.9% in April, reversing March’s 0.2% gain though beating forecasts.

The Ministry of Statistics will release March-quarter GDP data and provisional estimates for the 2024-25 (April-March) fiscal year at 4:00 pm today. India’s GDP is expected to have grown to 6.8% YoY in Q4FY25 from 6.2% previously, driven by rural demand and government spending despite delayed private investment.

Nifty witnessed a volatile session yesterday on the final day of monthly expiry. After witnessing selling pressure in the first half, the index staged a strong recovery in the second half, surging over 200 points to 24,892 levels. FIIs’ long-to-short ratio in index futures at the beginning of the June series stood at 0.25, as against 0.69 in the last series. This indicates, out of their total positions, 80% are still on the short side, suggesting higher possibility of short covering by them in the days to come which augurs well for the markets.

Nifty is in to continuation of a short-term consolidation trend. The 20-day EMA has now moved up to 24618, which is expected to serve as immediate support, while the 24900-25000 band is likely to continue acting as a resistance zone.

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Source: HDFC Securities Prime Research