Indian Benchmarks Slide Ahead of Powell's Jackson Hole Speech

The Indian benchmark indices, Sensex and Nifty, fell on Friday, halting a six-day winning streak, as investors became cautious ahead of Federal Reserve Chair Jerome Powell's policy remarks at the Jackson Hole symposium. Sensex declined 244 points, or 0.30%, to 81,746, while Nifty 50 fell 77 points, or 0.31% to trade at 25,009. The decline came after optimism over GST reforms.

Indian benchmark indices Sensex and Nifty experienced a decline at the opening on Friday, interrupting a six-day rally driven by optimism surrounding Goods and Services Tax (GST) reforms. Investors adopted a cautious stance in anticipation of Federal Reserve Chair Jerome Powell's policy remarks at the Jackson Hole symposium later in the day.

The S&P BSE Sensex declined 408 points, or 0.50%, to 81,598, while the NSE Nifty 50 fell 127 points, or 0.51% to trade at 24,962. On the 30-stock Sensex pack, shares of ICICI Bank, Adani Ports, HCL Tech, Eternal and Asian Paints led the laggards, sliding between 0.8% and 0.6%. Sector-wise, financials lost 0.4%, with the banking index down 0.3% as heavyweights HDFC Bank and ICICI Bank slipped 0.5% and 0.8%, respectively. Reliance Industries, the third-largest weight on the Nifty 50, dropped 0.7%. In the broader market, midcaps edged up 0.2% while small-caps were little changed.

Expert Views
The headwinds for the market from Trump tariffs will weigh on markets constraining the rally of the last 6 days, said Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments, adding that "if the penal tariff of 25% kicks in on August, and this appears likely, the impact on India’s growth will be not be 20 to 30 bp estimated with 25% reciprocal tariffs, but more. The market will have to discount that." A significant trend in the market is the outperformance of largecaps, which is desirable and fundamentally justified, Vijayakumar said, adding that while Nifty is up by 1% during the last one year, Nifty Midcap 150 is down by 0.35% and Nifty Smallcap 250 is down by 4.7% during the same period. "This trend is fundamentally justified and likely to continue. Midcap IT is showing resilience now. Investors should focus on valuations now," said Vijayakumar.

On the technical front, Anand James, Chief Market Strategist at Geojit Investments, said Nifty's upswings from yesterday went soft after stretching to the 25,153 level, "and within touching distance of the objectives that we had set out with last week." Directional indicators are yet to indicate enough momentum to continue pushing higher though, said James, adding that besides a bit of volatility expectations, the set up is not ready for a collapse either. "For now, 25033-24977 may continue to be used as the downside marker."

Market Musing-g
Investors expect Powell to tee up September rate cut in Friday speech [2]. Bond traders are betting that Jerome Powell will send a clear message this Friday morning that interest rate cuts are coming next month. The Federal Reserve Chair is scheduled to speak at 10 a.m. i...

References:
[1] https://economictimes.indiatimes.com/markets/stocks/news/sensex-falls-over-200-pts-nifty-tests-25000-ahead-of-powells-jackson-hole-speech/articleshow/123445100.cms
[2] https://coinmarketcap.com/community/articles/68a7d0262d654b7d40989798/