Sensex, Nifty: 5 reasons why stock market may ignore Wall Street selloff today

Sensex, Nifty, Stock market: The US President Donald Trump is persistent with his demand for a Fed rate cut, and signaled he is not happy with the US Federal Reserve Chair Jerome Powell and may even consider removing him from the post, sending Wall Street indices up to 3 per cent lower overnight. But its impact on Asian markets was largely limited, with Japan and Korean shares falling only marginally, raising hopes Indian markets may also not react much, relatively. 
 
The uncertainty over Jerome Powell as Fed Chair has sent dollar to a three-year low level, which is positive for emerging markets (EMs) such as India. 

The US Fed is already in a tight spot, balancing firmer inflation with softening growth indicators. Many analysts for now are expecting no Fed rate cut this year or a maximum of one cut. Goldman Sachs in a recent note said US inflation is still above target and facing upside risks and  that a clearer evidence of weakness in employment, consumer spending, and business investment will likely be needed for the Fed to act. But if the Fed indeed cut rates, it would be seen positive for EMs like India.  

Add to that are strong quarterly earnings from domestic banks and a drop in crude oil prices to $67 a barrel level.  Strong technical charts also signal downside is limited for the domestic market for now.  Some profit booking, however, cannot be ruled out for domestic stocks after a strong five-day rally. 

“We pivot on our market view and now expect a strong India equities rally with earnings bottoming out, moderate valuations, and global uncertainty substantially reduced. We retain our Nifty target at 26,000 for Mar-26E,” said Emkay Global.  

The brokerage said one may expect some volatility, though, as news on tariffs ebb and flow, but ignore the noise and buy into any consequent corrections.

Data showed dollar index hit a fresh low of 97.923, which was its weakest level since March 2022. FPI outflows in April so far stood at Rs 18,786 crore. 

“Our statistical model suggest that host of the negative news are now priced-in and Nifty has entered in to base formation in the vicinity of 21,900-23,800 that would eventually set the stage for Nifty to head towards 25,500 in next two quarters. The current strong recovery supported by positive divergence on the weekly chart, indicates that bottom is in place,” ICICI Direct said in a note.