Equity benchmarks the Sensex and the Nifty opened flattish on April 26, weighed down by the slower-than-expected GDP growth in the US, which pushed back rate cut expectations.
Around 9.30 am, the Sensex was up 113.31 points, or 0.15 percent, at 74,452.75, and the Nifty was up 33.40 points, or 0.15 percent, at 22,603.70. About 1,892 shares rose, 734 fell, and 96 remained unchanged.
The US GDP grew 1.6 percent in the first quarter, sharply below Dow Jones estimates of 2.4 percent. The downbeat growth, largely on account of sticky inflation, also showed that the personal consumption expenditures (PCE) price index rose 3.4 percent, well above the previous quarter’s 1.8 percent spike.
The combination of a slowdown in growth, and sticky inflation along with a spike in the PCE price index not only tipped off a spike in yields on 10-year US bonds but also altered market expectations of seeing just one or two rate cuts in 2024, lower than the earlier anticipated three.
The domestic market might see a knee-jerk reaction but it is the local news that would drive sentiment in the long term, Murthy Nagarajan, Head of Fixed Income, Tata Asset Management, said.
Vikas Gupta, CEO and Chief Investment Strategist, at OmniScience Capital, shared a similar view. As far as the Indian economy is concerned, the economic strength is stronger and that is likely to support the equity market, he said.
"Of course, “higher for longer” stance on US interest rates will be a slight negative in the near term, India's strong GDP growth will continue to keep it one of the few bright spots," he added
On the technical front, Anand James, chief market strategist, at Geojit Financial Services, believes that after opening the day with caution, the Nifty 50 can turn lower once it nears 22,760-22,775 levels. However, he feels that such a move is likely to gain momentum only if the index slips past 22,490.
"Meanwhile, 22,670-22,550 is the consolidation band that could retain
positivity, with eyes on 23,200," James added.
Regardless, the broader markets outperformed benchmarks, with BSE Midcap and BSE Smallcap indices gaining up to 0.6 percent in opening trade. Fear gauge India VIX, meanwhile, rose by 2 percent to around 11.
As for sectors, all but FMCG were trading in the green. The Nifty IT index was the top sectoral gainer, up nearly 2 percent, led by a sharp 10 percent uptick in shares of Tech Mahindra. Shares of the IT services company surged after its CEO chalked out a three-year turnaround plan.
Bajaj Finance was another Nifty 50 company that slumped 5 percent after its Q4 earnings missed the Street's estimates.
Going ahead, quarterly earnings of Bajaj Finserv, HCL Technologies, Maruti Suzuki, SBI Life Insurance, and Shriram Finance will remain on the radar for investors.
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