Opening Bell - Morning Commentary

Brace for volatility

The Federal Open Market Committee (FOMC) maintained its target range for the federal funds rate at 4.25%-4.5%. The Fed also made no change to its balance-sheet-reduction program, known as quantitative tightening (QT). Fed Chair Powell took a measured stance in his post-meeting press conference, acknowledging progress in inflation cooling while reiterating that the central bank remains data-dependent. Jerome Powell's comments did little to alter investor expectations for rate cuts later in the year.

Recent earnings announcements from three of the market-leading Magnificent 7 stocks received a lukewarm response from investors. Microsoft shares declined more than 3% in after-hours trading, while Tesla experienced initial losses before recovering. Meta saw a modest decline of one percent.

Apple is set to release its earnings report later today, that is keeping tech investors on the edge of their seats.

Asian markets are trading mostly higher, with some markets still closed for the Lunar New Year holiday.

Back home, Nifty rose for the second consecutive day with a gain of 205 points or 0.90%, to close at 23163 on 29th January. After three days of consecutive fall, the smaller stocks registered a sharp pullback of 3.32%, the highest one-day rise in percentage terms since 5th June 2024.

Our market is expected to experience significant volatility today. Following recent regulatory changes to expiration dates, derivative contracts for all five indices will expire simultaneously today. Substantial outstanding short positions in all these indexes is likely to create turbulent trading conditions. Adding to the market dynamics, 21 stocks available for derivative trading will release their quarterly results today, further amplifying potential price swings.

Nifty has closed above its 10 DMA for the first time since 3rd Jan 2025. FPIS and local traders are covering their shorts before the union budget on Saturday. Support has shifted up at 23000, while immediate resistances for the Nifty are seen at 23347 and 23426.

Indian markets are likely to open mildly lower in line with global cues.