US Fed Rates Unchanged: Could FOMC Meeting Decisions Be The Fuel For Nifty To Hit 25,000 On August 1?

The Indian stock market is likely to react positively to US Federal Reserve's latest monetary policy outcomes where key interest rates were kept unchanged on the expected lines. Also, the Fed did not rule out the possibility of a rate cut in September 2024, which is also what traders had predicted. Additionally, broader gains in global cues are another add-on to the bullish stance in Sensex and Nifty. Chances are that Nifty could even touch 25,000 zone on August 1.

After a two-day policy meeting, FOMC members led by chair Jerome Powell decided to maintain the target range for the federal funds rate at 5-1/4 to 5-1/2 per cent.

The rate decision is a reiteration of FOMC's aim to achieve maximum employment and inflation at the rate of 2 per cent over the longer run. Adding it said, "The Committee judges that the risks to achieving its employment and inflation goals continue to move into better balance."

Talking to the press, Powell said the broad sense of the committee is that the economy is moving closer to the point at which it would be appropriate to reduce their policy rate.

He added that when the totality of the data, the evolving outlook and the balance of risks are consistent with surging confidence in inflation and maintaining a solid labour market --- are met -- then lowering interest rates could be on the table as soon as the next meeting in September.

According to Powell, the latest inflation print has added to FOMC's confidence, and further cooling could only strengthen that confidence for a rate cut. Hence, Powell continued to reiterate that FOMC members still need greater confidence that inflation is moving sustainably towards 2%.

But this was all something investors had predicted from the Fed, and hence, the US market reacted positively. However, in the early trade of Thursday, Asian shares traded mixed with Japanese Nikkei 225 nosediving by over 1,000 points after the Bank of Japan hiked key rates way earlier before FOMC's July policy on Wednesday. Meanwhile, South Korea's KOSPI and Australia's ASX/200 index were in green.

Overnight, Wall Street ended in gains. Dow Jones Industrial Average rose by 99.46 points or 0.24%, while tech-heavy Nasdaq Composite index outperformed with gains of 451.98 points or 2.64%. Also, the S&P 500 index witnessed a strong upside of 85.86 points or 1.58%.

In the early trade of August 1, Gift Nifty also traded higher. The benchmark touched a new 52-week high of 25,158.

Ahead of pre-market opening on Thursday, Prashanth Tapse, Senior VP (Research), Mehta Equities said, the benchmark Nifty is set to reach 25,000 for the first time this Thursday, August 1st, marking a significant milestone for Indian investors. Corporate India appears robust amid this record high, reflecting a positive economic outlook. Meanwhile, the Federal Reserve has maintained interest rates at a 23-year high of 5.25 to 5.50%, signalling potential future adjustments.

Tapse added, "Stay tuned as Q1 results from major companies like AB CAPITAL, ADANI ENTERPRISES, DABUR, and others are expected today. For traders, consider buying Nifty (24951) and Bank Nifty (51533) with bullish targets, and watch stocks like M&M FINANCIAL, SIEMENS, and others for potential breakout opportunities."

Giving a technical view, Prabhudas Lilladher said, that the Nifty index after the consolidation witnessed has shown signs of improvement inching towards the psychological level of the 25000 zone with bias maintained strong and can anticipate further rise in the coming days. The index has sustained above the 24750 zone in the last 2 sessions indicating strength and shall carry on with the positive move for the next initial target of the 25500 level."

Further, on Bank Nifty, the brokerage added, BankNifty has been sluggish for quite some time and as mentioned earlier, would need a decisive breach above 52800 levels to trigger for fresh upward move and scale targets of 53500 and 55100 levels in the coming days. The support for the day is seen at 24800 levels while the resistance would be seen at 25100 levels. BankNifty would have the daily range of 51000-52000 levels.

Accordingly, Shiju Koothupalakkal - Technical Analyst at Prabhudas Lilladher has recommended BUY in 3 stocks on August 1. These are:

- BUY HAVELLS cmp 1849.85 Stop Loss 1810 Target 1930

- BUY ABCAPITAL cmp 226.88 Stop Loss 221 Target 238

- BUY KALPATARU PROJECT cmp 1370.95 Stop Loss 1342 Target 1435