Fed watch freezes Dalal Street; Nifty ekes out modest gains after brutal sell-off

Investors cautiously recovered market losses on Wednesday after a sharp sell-off the previous day, but gains remained cautious ahead of the U.S. Federal Reserve's policy decision. Factors such as high crude oil prices, a weakening rupee, and persistent selling in the technology sector dampened investor sentiment. The Nifty 50 closed at 23,217.60, up 99 points or 0.43%, while the BSE Sensex added 332.63 points or 0.45%.

However, the recovery lacked conviction, with the Nifty Midcap 100 ending nearly unchanged and the Nifty Smallcap 100 falling 0.18%, marking its fifth consecutive session of losses. Market breadth improved, with the BSE advance-decline ratio increasing to 0.84 from 0.36. Sectoral action was mixed, with FMCG, PSU banks, realty, and financial services gaining, while IT, pharma, and healthcare stocks lost ground.

Despite the recovery, the Nifty has dropped over 1,650 points from its August high of 24,772, and macro headwinds continue to impact the market. Brent crude hovered near $108 per barrel due to Middle East tensions and supply concerns, impacting India's import bill and inflation. The rupee remained weak at ₹95.95 per dollar, and foreign institutional investor selling continued to put pressure on equities.

Domestic demand signals showed mixed results, with moderating auto registrations, subdued rural indicators, and a slowdown in GST collection growth. Industrial activity also indicated fatigue, with petroleum consumption decreasing and steel consumption growth slowing. Investors are expected to closely monitor the U.S. Fed's rate decision and Chair Jerome Powell's comments on Thursday, as a balanced or dovish tone could support market recovery, aiming for the 23,400–23,600 resistance band.

A hawkish surprise or a rise in crude prices to $110 could reignite selling pressure, with 23,000–23,100 acting as immediate support.