Nifty tops 25000, Sensex gains as Street cheers Fed's rate cut hints; bullish trend to persist

The Fed chief signalling a possible rate cut in September is positive for global equity markets. More importantly, his comments that the US economy is normalising is a shot in the arm for bulls, according to V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

Benchmark indices Nifty crossed the 25,000 milestone as investors cheered the US Federal Reserve's dovish commentary and hints of September rate cuts. At 09:17 am, the Sensex was up 228.45 points or 0.28 percent at 81,969.79, and the Nifty was up 88.40 points or 0.35 percent at 25,039.60.

About 1,916 shares advanced, 589 declined, and 126 shares remained unchanged. The broader market, mainly the mid and smallcap index, continued the uptrend, rising 0.3 and 0.5 percent each.

Except for Nifty IT, all sectoral indices were trading higher. Nifty Metal witnessed buying, surging 1.5 percent. Nifty Auto followed with gains of up to 0.8 percent.

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Fundamental View

US Fed Chair Jerome Powell's signalling a possible rate cut in September is positive for global equity markets. More importantly, his comments that the US economy is normalising is a shot in the arm for bulls, according to V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

"The dip in the 10-year US bond yield to 4.05 is sharp and may halt and perhaps even reverse the FII selling in the cash market in recent days. If both FIIs and DIIs turn buyers the market can spurt today but sustaining the rally would be difficult since valuations are getting stretched," he said.

"Indications suggest that the current market tone will persist. With key sectors, except banking, contributing to the momentum, traders should focus on selecting quality stocks and utilize any market dips for accumulation," said Ajit Mishra – SVP, Research, Religare Broking Ltd.

Technical View

On the daily chart, Nifty has been consolidating in the range of 24,750 – 25,000 since the last three trading sessions.

The hourly momentum indicator has reached the equilibrium line and indicating that the consolidation is complete and the Nifty is now poised for a breakout, according to Jatin Gedia – Technical Research Analyst at Sharekhan by BNP Paribas.

"Nifty Short-term target is placed at 25350 – 25530 and crucial support is placed at 24750 – 24700," he said.

Gedia expects Bank Nifty to resume its upmove towards 52000 – 52120 where the 20-day moving average is placed. "Overall, we expect a bullish move in the indices going ahead," he said.

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