What is your view on the Nifty and Sensex movement for Thursday 26th May 2022?

On Wednesday, the Nifty closed at 16,025 fairly close to the support mark. The Nifty lost almost 100 points in the day ahead of the FOMC minutes to be announced late on 25th May. Paint stocks like Asian Paints and Berger saw the most pressure due to Grasim capex while Adani Ports fell due to the huge forex loss. Divi’s has lost 18% since results.

In terms of the market structure, the breadth of the Nifty was largely unfavourable at 18:32 with only the banks and the NBFC index in the positive. This is largely on the back of aggressive inflation control measures by the state. VIX was almost flat around the 25.3 levels, but on the positive side the Fed has showed flexibility in its minutes on rate decision.

Foreign investors net sold Rs.1,803 crore in equities even as domestic funds and LIC bought stocks worth Rs.2,230 crore on Wednesday. Now FPIs have sold Rs2.5 trillion since October 2021. The Fed flexibility led to a rally of 192 points in the Dow and 170 points on the NASDAQ. SGX Nifty is trading 110 higher in early trades.

One big change in the Fed policy minutes is that the Fed is keeping a small exit route open should growth get impeded. For now, the stand remains hawkish till August. Fed may relook at slowing down on rate hikes by the end of the year, if negative impact is too high. It is this pragmatism that should be positive vibe for the Indian markets.