Sensex, Nifty Rise on Positive Asian Trends; Focus on US Fed Policy

Asian stocks got off to a positive start on Monday ahead of the Federal Reserve's policy meeting later in the week and market participants will closely follow the US Federal Reserve's policy decision and its stance on their rate cut trajectory.

Asia-Pacific markets gained this morning, with Japan's Nikkei 225, South Korea's Kospi, and Australia's S&P 200 indices surging up to 0.8%. Domestic benchmark indices Sensex and Nifty gained on April 29 morning, tracking strong moves in Asia-Pacific markets. However, experts warned that higher bond yields could derail the equity bull run, advising investors to adopt a stock-specific strategy amid ongoing corporate earnings season.

Around morning, the Sensex was up 332.74 points or 0.45% at 74,062.90, and the Nifty was up 75.40 points or 0.34% at 22,495.40. The market breadth favored gainers as around 2,120 shares advanced, 662 declined, and 119 traded unchanged.

Sameet Chavan, Head of Research for Technicals and Derivatives at Angel One, suggested investors to focus and brace up for the mega event – the Lok Sabha Elections. He forecasts an immediate support at 22,300 for the Nifty, with 2,600-2,800 as strong resistance.

The US Federal Reserve's policy decision, due on May 1, 2024, and its stance on rate cut trajectory will be the focus for eager investors this week. Though the US Fed is expected to keep rates unchanged, any hints towards easing of monetary policy will shape market movements in the near-term, believe analysts.

Investors will closely watch Jerome Powell's statements for insights into the central bank's future monetary policy path. The Fed is widely expected to keep rates unchanged in the range of 5.25-5.5%.

Oil prices ticked down on expectations that higher-for-longer US interest rates would dampen demand, while news of a potential Gaza ceasefire eased fears of supply constraints.

The major negative in markets continues to be sustained selling by foreign institutional investors (FIIs), said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

"This selling by FIIs, in both equity and debt, will continue to weigh on markets so long as the US bond yields remain high, which, in turn, will be decided by the US inflation numbers. The latest US core PCE inflation numbers came in on expected lines with 2.8% YoY growth," he said.

Meanwhile, broader markets traded with gains within the first hour of trade. The BSE Midcap and BSE Smallcap indices gained up to 0.3%. Fear gauge India VIX jumped over 10% to trade around 12.03.

Sectorally, Nifty Realty index was the worst hit weighed by DLF, Macrotech Developers, and Godrej Properties. Conversely, Bank Nifty index was the top performer, led by gains in ICICI Bank, SBI, and Bajaj Finance.