Nifty, Sensex Could Extend Losses as Middle East Tensions Rise, Fed Keeps Rates Unchanged
On Thursday, June 19, Nifty 50 and Sensex are likely to start on a weak note amid a fragile cues from the global peers, after the U.S. Federal Reserve’s policy outcome and escalating tensions in the Middle East, as the ongoing Israel-Iran conflict is stoking fears of deeper U.S. involvement.
As of 7:26 AM, the GIFT Nifty was trading near the 24,771 mark, down 38 points from its previous close. This suggests that Indian markets are likely to witness a weak start.
Asian peers were trading in red, whereas the U.S. markets ended on a flat note overnight. This followed the U.S. Federal Reserve’s decision to maintain current interest rates. So, lower interest rates did not come for President Donald Trump, who’s been slamming Federal Reserve Chairman Jerome Powell for deep rate cuts.
Regarding the institutional flow, the DIIs in Indian equities have remained net buyers for the past 22 trading sessions.
On Wednesday, June 18, Foreign Institutional Investors (FIIs) were net buyers, having bought equities worth ₹890.93 crore. Domestic Institutional Investors (DIIs), on the other hand, bought shares totalling ₹1,091.34 crore during the same session.
According to reports, the big news from the Middle-East is that Iran has said that it won’t surrender in the Israel war. Iran’s Supreme Leader Ayatollah Ali Khamenei has also warned that any US military intervention would result in “irreparable damage.”
Indian equity benchmarks extended their decline for the second consecutive session on Wednesday. The Sensex slipped by 138.64 points (0.17%) to end the day at 81,444.66, while the Nifty 50 also edged down by 41.35 points (0.17%) to close at 24,812.05.
The Securities and Exchange Board of India (SEBI) has announced a set of regulatory changes aimed at easing compliance for Foreign Portfolio Investors (FPIs) who focus solely on Indian government securities (G-Secs). In its recent board meeting, SEBI also decided to permit startup founders to retain their stock options even after their companies get listed on stock exchanges. Additionally, the regulator has approved a proposal that allows certain state-owned enterprises to delist from the stock market without needing consent from minority shareholders.
Asian markets traded lower on Thursday as investors reacted to the U.S. Federal Reserve’s decision to maintain current interest rates. Sentiment remained cautious amid continued concerns over the Israel-Iran conflict.
U.S. markets closed on a mixed note Wednesday following the Federal Reserve’s policy announcement and remarks from Fed Chair Jerome Powell. The Dow Jones Industrial Average slipped 44.14 points, or 0.10%, settling at 42,171.66. The S&P 500 inched down by 1.85 points, or 0.03%, to close at 5,980.87. On the other hand, the Nasdaq Composite managed a modest gain, rising 25.18 points, or 0.13%, to end at 19,546.27.
The number of people in the U.S. applying for unemployment benefits declined last week. According to seasonally adjusted figures, initial jobless claims dropped by 5,000 to 245,000 for the week ending June 14.
As anticipated by most, the Federal Reserve's Federal Open Market Committee (FOMC) chose to keep its policy rate unchanged during the June meeting. The target range for the federal funds rate—the rate at which banks lend to each other overnight—remains at 4.25% to 4.5%. The latest Summary of Economic Projections continues to reflect a median expectation of two rate cuts later this year.
In the statement released alongside the decision, the Fed noted that while uncertainty surrounding the economic outlook has eased, concerns remain elevated regarding persistent inflation and the possibility of rising unemployment. Additionally, both the Fed and financial markets are closely monitoring developments in trade policy and the federal budget, as well as evaluating how immigration restrictions might be influencing the labour market.
Crude oil prices edged down as markets reacted to uncertain signals from U.S. President Donald Trump regarding America's possible role in the ongoing tensions between Israel and Iran. Brent crude slipped by 0.39% to $76.40 per barrel, while July contracts for US West Texas Intermediate (WTI) fell 0.37% to $74.86 per barrel.
Disclaimer: The article is for informational purposes only and not investment advice.
For android only