Stock market outlook: How will Nifty50, BSE Sensex react to US Fed chair Powell’s rate cut hints? What analysts say

Analysts recommend that home fairness markets could reply positively to indicators of a doable US Federal Reserve rate discount. (AI picture)

Indian fairness benchmark indices, Nifty50 and BSE Sensex, are anticipated to see a gap-up opening on Monday after US Federal Reserve chairman Jerome Powell indicated that the central financial institution could cut charges in its September coverage assessment.Analysts recommend that home fairness markets could reply positively to indicators of a doable US Federal Reserve rate discount, while buyers stay watchful of the approaching deadline for supplementary US tariffs on Indian merchandise within the upcoming shortened buying and selling week. Favourable worldwide indicators could provide backing, following substantial positive aspects in US markets and weakening of the greenback index after Powell signalled doable rate reductions throughout his Jackson Hole Symposium handle, analysts say.Additionally, market actions throughout the week will be influenced by overseas investor actions, worldwide market developments and scheduled financial information releases equivalent to GDP progress numbers.Last week witnessed the BSE benchmark advancing by 709.19 factors or 0.87%, while the Nifty registered positive aspects of 238.8 factors or 0.96%.

What Fed’s Powell indicated on rate cut

Jerome Powell steered on Friday that rates of interest could be lowered throughout the September central financial institution assembly. He adopted a cautious strategy, avoiding particular guarantees about rate cuts. His assertion recognised rising worries about jobs while noting ongoing inflation issues.“While the labor market appears to be in balance, it is a curious kind of balance that results from a marked slowing in both the supply of and demand for workers. This unusual situation suggests that downside risks to employment are rising, and if those risks materialize, they can do so quickly in the form of sharply higher layoffs and rising unemployment,” Powell stated.“At the same time, GDP growth has slowed, notably in the first half of this year, to a pace of 1.2%, roughly half the 2.5% pace in 2024. The decline in growth has largely reflected a slowdown in consumer spending, as with the labor market. Some of the slowing in GDP likely reflects slower growth of supply or potential output.“We proceed to imagine that financial coverage should be ahead trying and think about the lags its results on the financial system. For this cause, our coverage actions rely upon the financial outlook and the stability of dangers to that outlook,” he said.

How will Indian stock markets react?

According to Sunny Agrawal, Head – Fundamental Research at SBI Securities, Indian stock markets are expected to react positively on Monday. “Powell indicates conditions ‘may warrant’ interest rate cuts as the situation suggests downside risks to employment rising. This is likely to put pressure on the dollar and augur well for riskier asset classes – EMs like India and commodities. Metals and IT stocks are likely to react positively in the trade on Monday,” Agarwal told TOI.Dr VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited said the stock market’s upside may be muted to US President Donald Trump’s lingering tariffs.“Fed chief Powell’s speech at Jackson Hole indicates a rate cut in September. His remark that ‘there is a downside risk to unemployment and shifting risk balance may warrant policy adjustment’ clearly indicates a rate cut in September. The US markets have responded with rise in stock prices and decline in bond yields. The Indian market, too, may respond positively on Monday, but here tariff concerns are likely to weigh on markets more,” he told TOI.Siddhartha Khemka, who leads Research at the Wealth Management division of Motilal Oswal Financial Services Ltd, said, “We anticipate Indian equities to stay supported by optimism round GST 2.0 reforms and home macro power. Globally, readability on US tariff actions in opposition to India and upcoming GDP information from each India and the US will form investor sentiment”.(Disclaimer: Recommendations and views on the stock market and other asset classes given by experts are their own. These opinions do not represent the views of The Times of India)