Cautious Start for Indian Markets Amid Fed Signals and Middle East Tensions

At 9:15 a.m. IST, the Nifty 50 slipped 0.04 per cent to 24,803.25, while the BSE Sensex dipped 0.05 per cent to 81,403.94.

Market Update at 10:30 AM: India’s key stock indices began Thursday’s session on a muted note, as caution prevailed among investors amid firm signals from the U.S. Federal Reserve and ongoing tensions in the Middle East.

At 9:15 a.m. IST, the Nifty 50 slipped 0.04 per cent to 24,803.25, while the BSE Sensex dipped 0.05 per cent to 81,403.94. Sector-wise, nine out of the 13 major segments were in the red, and both Mid-Cap and Small-Cap indices showed little movement in early trade.

Across Asia, markets traded lower, with the MSCI Asia ex-Japan index dropping 1.1 per cent. This came after the Fed opted to maintain its current interest rate but indicated a slower pace of easing, with only two rate cuts expected this year. Fed Chair Jerome Powell also highlighted potential inflationary pressures in goods, possibly influenced by trade tariffs under U.S. President Donald Trump’s policies.

Meanwhile, geopolitical concerns remained heightened. The Israel-Iran conflict entered its seventh day. Iran’s Supreme Leader Ayatollah Ali Khamenei dismissed Trump’s call for unconditional surrender, prompting a stern response from Trump, who warned of uncertain consequences and said his patience had worn thin.

Pre-Market Update at 8:00 AM: Indian benchmark indices, Sensex and Nifty 50, are expected to begin Thursday’s session on a softer note, influenced by mixed global cues and rising geopolitical tensions in the Middle East. As of 7:26 AM, GIFT Nifty futures were trading around 24,771, down by 38 points, hinting at a weak start for domestic equities.

Asian markets showed a subdued trend following the U.S. Federal Reserve’s decision to hold interest rates steady. Meanwhile, U.S. markets remained largely flat overnight. Fed Chair Jerome Powell signaled that inflation may see an uptick in the near term.

Domestic Institutional Investors (DIIs) have maintained their buying momentum for 22 straight trading sessions. On Wednesday, June 18, FIIs net purchased equities worth Rs  890.93 crore, while DIIs invested Rs  1,091.34 crore.

Tensions in the Middle East escalated as Iran’s Supreme Leader Ayatollah Ali Khamenei rejected U.S. calls for de-escalation amid continued Israeli attacks. He warned that any military intervention by the U.S. could have severe consequences. European diplomats are preparing to meet Iranian officials on Friday to ease the situation. Meanwhile, Israel has confirmed launching fresh strikes across Iran, including Tehran.

On Wednesday, Indian indices extended their losses for a second consecutive session. The Sensex declined by 138.64 points, closing at 81,444.66. Similarly, the Nifty 50 ended 41.35 points lower at 24,812.05.

SEBI has introduced new measures aimed at easing compliance for FPIs investing only in Indian government securities. In its recent board meeting, SEBI also approved changes allowing startup founders to retain stock options post-listing and permitted selected public sector companies to delist without minority shareholder approval.

Asian equities opened in the red as markets digested the Fed's rate stance and geopolitical developments. On Wall Street, the Dow fell by 44.14 points (0.10 per cent) to 42,171.66. The S&P 500 slipped marginally by 1.85 points (0.03 per cent) to 5,980.87, while the Nasdaq gained 25.18 points (0.13 per cent), closing at 19,546.27.

The U.S. labor market showed signs of strength, with initial jobless claims falling by 5,000 to 245,000 for the week ending June 14.

The Fed kept its policy rate unchanged at 4.25 per cent–4.5 per cent. Looking ahead, the FOMC projects a 50 basis points rate cut in 2025. For 2026, the estimated rate reduction has been revised to 25 basis points from the earlier 50 bps forecast.

Oil prices dipped slightly amid global uncertainty. Brent crude slipped 0.39 per cent to USD 76.40 per barrel, while WTI for July delivery dropped 0.37 per cent to USD 74.86, as markets reacted to unclear signals about the U.S. stance on the Israel-Iran conflict.

For today, Aditya Birla Fashion and Retail, Biocon, Birlasoft, Central Depository Services, Chambal Fertilisers and Chemicals, Housing and Urban Development Corp, Manappuram Finance, RBL Bank and Titagarh Rail Systems continue to remain under the F&O ban list.

Disclaimer: The article is for informational purposes only and not investment advice.