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.

Opening Bell - Daily Morning Commentary

Markets recover from Deepseek Selloff

US Equity markets finished higher on Tuesday, as technology stocks rebounded from sell-off that was sparked by Chinese AI startup DeepSeek, a low-cost Chinese artificial intelligence model that could threaten the dominance of U.S. rivals. Some investors hunted for bargains after record-breaking wipeout.

The Federal Open Market Committee (FOMC) will conclude its January meeting on Wednesday, with markets forecasting Fed to slow its pace of easing, starting with a pause this month.

Microsoft and Meta are scheduled to report fourth-quarter earnings on Wednesday, with Apple and cloud-computing leader Amazon 0on deck for Thursday. Investors will be looking for perspective from management on the potential impact of DeepSeek's AI model on their businesses.

Some Asian markets are closed or have shortened trading sessions due to the Lunar New Year holiday. The U.S. dollar advanced versus major currencies. In the commodity space, WTI oil and gold traded higher.

India's benchmark Nifty index staged a welcome recovery on January 28th, rising 128 points (0.56%) to close at 22,957, primarily driven by a strong performance in banking stocks. This upward movement provided much-needed relief to investors following two consecutive sessions of market decline.

Market sentiment is currently focused on three crucial upcoming events that could significantly influence the market direction in the near term: First, all eyes are on the US Federal Reserve's monetary policy meeting conclusion tonight, which could provide important signals about the central bank's interest rate trajectory for 2025. Second, the monthly futures and options (F&O) expiry scheduled for Thursday is expected to introduce some volatility as traders adjust their positions. These expiry sessions typically witness increased trading activity and can lead to sharp market movements. Third, and perhaps most significantly for domestic investors, the presentation of India's Union Budget 2025 on Saturday is generating considerable anticipation. The convergence of these three major events within the same week has created a heightened sense of caution among investors, who are carefully positioning their portfolios in anticipation of potential market-moving developments.

Indian markets are slated to open mildly higher today, on the back of positive global cues.

Opening Bell - Morning Commentary

Relief Rally at the opening

DeepSeek's introduction of a free, open-source AI model has rattled the technology sector, with the Chinese company claiming capabilities comparable to ChatGPT at substantially lower development costs. The announcement triggered a massive selloff in technology stocks, particularly affecting industry leader Nvidia, which suffered an unprecedented $593 billion single-day market value loss - the largest ever recorded on Wall Street.

Indian markets are expected to show resilience at opening, having already factored in the significant declines in U.S. markets. The recovery in the Dow Jones from its initial plunge, coupled with the Reserve Bank of India's recent liquidity measures, has fostered optimism about potential rate cuts next week.

The RBI has implemented comprehensive liquidity enhancement measures, including a planned Rs 60,000 crore Open Market Operation purchase to be executed in three phases, alongside a Variable Rate Repo auction scheduled for next month. These initiatives signal the central bank's commitment to maintaining adequate liquidity, with additional measures anticipated during next week's Monetary Policy Committee meeting.

Market participants remain cautious amid the technological upheaval in artificial intelligence space, upcoming monetary policy decisions from both the RBI and Federal Reserve, and their policy guidance. This apprehension is compounded by inconsistent corporate earnings reports and uncertainty surrounding the upcoming Union Budget.

Nifty has fallen below the critical support threshold of 22,976, which now serves as resistance. Support lies between 22670 and 22800.