Mkts rebound amid caution, renewed wave of optimism

FPJ News Service mumbai

A new wave of optimism swept through the domestic market on Monday driven by expectations of a Fed rate cut in September, and a subsequent decline in the US 10-year yield.

The 30-share BSE Sensex climbed 329.06 points to close at 81,635.91 with 20 of its constituents ending higher and 10 with losses. During the day, the key index jumped 492.21 points to 81,799.06. The 50-share NSE Nifty rose by 97.65 points to 24,967.75.

“The IT index outperformed, buoyed by favourable global sentiment such as expectations of a Fed rate cut. The domestic levers stay positive with the proposed GST rationalisation to push consumption demand, and a good monsoon season could serve as a catalyst to navigate any uncertainty in the global trade environment,” opined Vinod Nair, head of research at Geojit Investments.

“Even though a 50% tariff is unlikely to significantly impact economic growth, there will be adverse impact on India’s exports, and loss of jobs in labour-intensive sectors like textiles, gems and jewellery and leather. The sentimental impact of this development will be negative from the market perspective. FII selling, too, can impact the market. Domestic-consumption segments like financials, telecom, aviation, hotels, cement and segments of capital goods are better placed to withstand the adverse headwinds,” Dr VK Vijayakumar, chief investment strategist at Geojit Investments told The FPJ Money.

“Fed chief’s remarks that ‘there is a downside risk to unemployment and shifting risk balance may warrant policy adjustment’ clearly indicates a rate cut next month. The US stock market gave a thumbs up to this comment. This positive factor may not get reflected in the Indian market since tariff concerns are likely to weigh more,” he added.