Markets turn choppy ahead of US Fed monetary policy outcome

• Benchmark indices were choppy in the early session as Sensex remained volatile at 61,000, falling 0.20% while Nifty50 fell 0.19% to 18,110.
• Analysts believe markets will continue to be in a positive range despite some volatility.
• All sectors except auto, IT and energy were trading in the green with pharma index gaining 1.28% and metal index rising 0.69%.

Indian benchmark indices opened slightly lower on Wednesday, despite positive cues from Asian markets and domestic corporate earnings. The markets have been on a gaining streak for the last four trading sessions.

Benchmark indices were choppy in the early session as Sensex remained volatile at 61,000, falling 0.20% while Nifty50 was 0.19% lower at 18,110.

This movement is ahead of the US Federal Reserve meeting which began on November 1 and will end today on November 2 with an outcome on interest rates. It will provide a cue to other central banks around the world.

While the market is expecting another rate hike, it is expecting a reduction in the size of rate hikes. All eyes will be on the commentary by the Fed chief Jerome Powell on inflation and monetary tightening.

Analysts however believe markets will continue to be in a positive range despite some volatility caused by macro concerns.

“Going ahead, Indian markets are likely to continue with their positive momentum with bouts of volatility. Investors would now await the Federal Reserve meeting outcome and commentary that is due on Wednesday,” said Siddhartha Khemka, head - retail research at Motilal Oswal Financial Services.

While volatility is expected to remain, benchmark indices may continue to remain above its psychological mark. This week, Sensex crossed the 61,000 psychological mark and Nifty at 18,000.

“Nifty has reclaimed the 18,100+ zone almost after seven months and it is likely to continue this tone however we can’t ignore the possibility of an intermediate pause or dip. Besides, the upcoming events viz. the outcome of the US Fed meet and MPC’s special meet will keep the volatility high. Participants should maintain the ‘buy on dips’ approach and stick with the sectors which are participating in the move,” said Ajit Mishra, VP - research at Religare Broking.

In addition, RBI’s sudden meeting on November 3 may also keep up the volatility. The meeting will discuss what RBI would tell the centre as to why it was not able to control the inflation below 6% for three consecutive quarters.

Encouraging domestic data like GST collections above ₹1.5 lakh crore for eight months in a row along with October PMI data surging to 2-month high is a positive cue for the markets.

On November 1, foreign institutional investors (FIIs) bought shares worth ₹2,609 crore, whereas domestic institutional investors (DIIs) made a net sale of shares worth ₹730 crore, as per provisional data available on the NSE.

Crude oil prices rose in early trade on Wednesday after data suggested US crude inventories unexpectedly shrank in the prior week. Brent crude oil price rose to $95 per barrel today.

All sectors except auto, IT and energy were trading in the green with pharma index gaining 1.28% and metal index rising 0.69%.
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