Sensex, Nifty Open Steady Despite FOMC's Inflation Concerns

Despite a flat start, the Sensex and Nifty 50 climbed higher. This bullish sentiment remained unaffected by the US FOMC minutes, which indicated a continued hawkish stance on interest rates. Indian equities are now focused on Q4 earnings and election developments for future market direction.

At 9:40 AM IST, the Sensex surged 221 points (0.3%) to 74,442, while the Nifty 50 gained 71 points to 22,669. The broader markets exceeded the performance of the benchmark indices, with the BSE Midcap and BSE Smallcap indexes both climbing 0.5%.

Banking stocks soared, leading the market's upward trajectory, while power stocks languished, becoming the most notable laggards within the sectoral indices.

"The market might experience a slight knee-jerk reaction to the FOMC minutes, but it won't have a major impact. It's just a binary event that will pass," said Gaurang Shah, Senior Vice President at Geojit Financial Services. Shah stated that the Indian market would be significantly impacted by the Q4 FY24 earnings and the upcoming general elections. Shah further mentioned that the markets are expected to experience high volatility with the monthly F&O expiry on May 30 and the exit polls scheduled for June 1.

"Indian markets are likely to underperform in the short term as investors await the election outcome, with FIIs staying on the sidelines," said Vinod Nair, Head of Research at Geojit Financial Services.

"Benchmark indices witnessed a steady rise in the previous five sessions, hitting 22,600 with a positive bias and active participation from the broader markets," said Vaishali Parekh, Vice President of Technical Research at Prabhudas Lilladher.

"Should the Nifty index manage to sustain a close above the 22,600 level, it may extend its upward trajectory towards 22,800 and 23,000 levels," said Mandar Bhojane, Research Analyst at Choice Broking.

Gaurang Shah identified the 22,300-22,000 range as good levels for long-term investment. Despite the selling of Indian equities by FIIs, the benchmark indices are holding near highs due to continued buying by DIIs. "Domestic institutions have great strength to withstand any selling from FIIs," said Shah.

“On the daily chart, Nifty continues to hold above the 20 and 50 day SMA, which is a positive signal. The 14-day RSI at 59.83 is rising and not overbought, which is encouraging. With the near-term uptrend intact, Nifty could now head towards the life highs of 22,795 in the coming sessions," said Subash Gangadharan, Senior Technical/Derivative Analyst at HDFC Securities.

Analysts expect FIIs to return to India after the election results, as India's growth story remains strong.