Indian shares’ longest rally in 2024 tempered by caution ahead of Powell’s speech

BENGALURU: Indian shares rose for a seventh straight session on Friday, their longest rally this year, although the magnitude of the gains eased as caution set in ahead of Federal Reserve Chair Jerome Powell’s speech, expected to give cues on U.S. rate cuts.

The NSE Nifty 50 index was up 0.05% at 24,823.15. The S&P BSE Sensex added 0.04% to 81,086.21. They have gained about 3% in the past seven sessions on rising bets of a U.S. rate cut and on sustained domestic inflows.

However, about half of those gains came on day two as U.S. recession fears eased. Since then, the daily gains have eased, while the Nifty’s trading range has narrowed to under 100 points in the last two sessions.

While the market’s outlook remains positive, “caution prevailed on the session as investors contemplated if the Fed is behind the curve or ahead in terms of rate easing,” said Aishvarya Dadheech, chief investment officer at Mumbai-based Fident Asset Management.

Financials, IT lead rise in Indian shares

Asian markets were flat, while European markets inched higher, ahead of Powell’s speech, due after India market hours.

Although a U.S. rate cut is all but certain in September, the odds of a 50-basis-point cut have been easing, according to the CME’s FedWatch tool.

If Powell takes a dovish tone, it will redirect foreign inflows to India and could spark a rally to record highs, said Dadheech.

On the day, the U.S. rate-sensitive IT index fell 1%. They also gained the least over the week. TVS Motors and Bajaj Auto rose 2.24% and 4.97%, respectively, boosting auto’s by 1.12%, after J.P.Morgan called them its top two picks in the sector.

On the flip side, Reliance Group companies – Reliance Infrastructure, Reliance Home Finance and Reliance Power – lost 5%-10% after Chairman Anil Ambani and 24 others were banned from the securities markets for five years due to diversion of funds.