Jackson Hole takeaway: What does Jerome Powell’s speech mean for Indian equities?

Powell warned that inflation risks remain elevated, partly due to tariffs imposed by the US administration.

Dalal Street is poised to open on a strong footing on Monday after Federal Reserve Chair Jerome Powell’s remarks at the Jackson Hole Symposium lifted global sentiment. Nifty futures were trading at 24,995, up 0.4 percent or 80 points, indicating a positive start.

The annual Jackson Hole Symposium, one of the most closely tracked events for global markets, ended on a note that could shape trading in the weeks ahead. Powell acknowledged a “shifting balance of risks” in the US economy, including signs of stress in the labour market, and hinted at possible “policy adjustments” in the coming months. While he cautioned that inflation risks remain elevated, his tone was interpreted as dovish, raising expectations of a rate cut at the Fed’s September 16–17 meeting.

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Markets immediately cheered the speech. US equities saw broad-based buying on Friday, and the dollar came under pressure as traders priced in a 25-basis-point cut in September.

For India, Powell’s stance has implications for flows and sentiment. "Powell did something that no one thought he would – he went ahead and signalled that the Fed is ready to cut interest rates at their next meeting. The bar is extremely high now for the Fed to leave rates unchanged in less than a month," said market expert Ajay Bagga. He added that investors should align allocations towards risk and rate-sensitive plays—quality cyclicals, duration, and select commodities—while keeping a close eye on upcoming jobs and inflation data.

VK Vijayakumar, Chief Investment Strategist at Geojit Investments, also said Powell’s speech indicates that a September cut is on the table, which could support Indian equities in the short term.

Still, foreign institutional investors (FIIs) remain a headwind. Through August, FIIs have sold Rs 25,564 crore worth of shares, taking total equity outflows this year to Rs 1,57,440 crore. The selling has not been confined to equities, as FIIs have been paring bond exposure too. Valuations remain the key concern, with Indian markets trading expensive compared to peers. A weakening dollar, if sustained, could ease the pace of outflows, analysts said.

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In the near term, three factors will guide market direction: the Fed’s September decision, the trajectory of FII flows, and the outcome of a possible trade deal with the US as the August 27 deadline approaches.

Key levels to watch out for in today's session

On the technical front, Nifty is holding on to support near 24,800. A shooting star on the weekly chart, coupled with call writing at higher levels and unwinding of puts, suggests limited upside and prolonged consolidation. Unless the index clears 25,150, upside momentum is likely to remain capped, while holding above 24,800 is critical to avoid deeper cuts. For now, analysts advise a “sell on rise” strategy, with traders watching 25,000 on the upside and 24,800 on the downside for the next decisive move.

The Bank Nifty mirrors a similar setup. The index is clinging to support at 55,000 after giving up prior gains, with heightened call writing and put unwinding pointing to a fragile structure. "Holding above the 55,000 mark is critical to avoid deeper cuts, while any sustained move below it may open the door for further downside. On the upside, only a decisive reclaim above 56,150 would negate the weak bias. For now, the structure favours a ‘sell on rise’ strategy, with traders eyeing 55,000 as the key trigger zone for the next leg of directional momentum," said Dhupesh Dhameja of SAMCO Securities.

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