Pre-Open Points To Muted Start For Shares As Fed Leaves Markets Uncertain

Mumbai, July 30: Indian shares edged down at pre open signalling a muted start for benchmarks as investors weighed the Fed’s decision to hold rates steady against a firm warning from its chair on the need to keep inflation under control, adding uncertainty to the outlook for future policy moves. 

Nifty 50 declined 0.06% and Sensex edged down 0.02% at pre open while Gift Nifty declined 0.15%. 

Meanwhile, the US-Iran war widened even as crude fell below $90 per barrel.  

Indian equities are set to enter Thursday’s session after a strong rebound in the previous trading day, when the benchmark indices climbed over 1% as investors rotated into IT stocks amid a sharp correction in the AI-led technology rally in the U.S. and parts of Asia. In stock-specific developments, Eicher Motors is expected to remain in focus after beating estimates for first-quarter profit. Dabur reported higher June-quarter profit, helped by price increases that offset cost inflation, while Bajaj Housing Finance posted a rise in quarterly earnings, supported by loan growth. Sun Pharma, meanwhile, received regulatory approval to manufacture and market semaglutide in Brazil. 

Asian Markets Mixed 

Asian stocks were mixed in early trade after a bruising session on Wall Street, with investors assessing the fallout from the Federal Reserve’s decision to leave interest rates unchanged and a growing divide among policymakers over the future path of monetary policy. 

South Korea’s Kospi rose 1.8%, while Japan’s Nikkei advanced 1.3%. MSCI’s broadest index of Asia-Pacific shares outside Japan edged down 0.01%, while Hong Kong’s Hang Seng was largely flat. 

The mixed regional performance reflected fragile risk appetite and could set the tone for a cautious start to Indian markets. 

The Fed kept its policy rate unchanged at 3.50%-3.75%, as widely expected, but the decision was accompanied by an unusual degree of disagreement among policymakers, with three members favouring a rate hike. The lack of clarity over the timing and direction of the next policy move unsettled investors, particularly as markets had been positioning for an eventual easing in borrowing costs. 

Wall Street Slumps As Tech Stocks Take A Hit 

The uncertainty was reflected in U.S. markets, where Wall Street suffered a sharp selloff. 

The S&P 500 declined 1.52% to a one-month low, while the Dow Jones Industrial Average dropped 2.19%. The Nasdaq 100 fell 1.7%, extending its decline from its June peak to around 11%, as investors continued to reassess lofty valuations in technology and artificial intelligence-related stocks. 

The weakness in the technology space was compounded by disappointing signals from the semiconductor industry. Shares of South Korean chipmaker SK Hynix fell sharply after its results, while AI infrastructure company Vertiv also declined after missing forecasts. 

The pressure spread across global chip stocks, raising questions over the sustainability of the massive capital spending cycle linked to artificial intelligence and whether valuations in the sector have run ahead of fundamentals. 

Indian IT Stocks In Focus 

The global technology selloff could have a mixed impact on Indian equities. Indian IT majors such as TCS, Infosys, HCLTech and Wipro have relatively limited direct exposure to the high-valuation AI. 

As a result, investors could potentially rotate towards established Indian IT services companies if the global correction remains concentrated in semiconductor and AI infrastructure stocks. 

The broader correction in technology shares could also prompt investors to reassess valuations of Indian stocks that have benefited from strong AI-related optimism, particularly those with significant exposure to the global technology investment cycle. 

Source

• exchanges