Markets steady after Fed rate hike; indices show mixed trend

The U.S. Federal Reserve raised interest rates by 25 basis points on Thursday, signaling at least one more hike this year. This move unsettled investors, causing currencies to fluctuate and keeping traders on edge across emerging markets. India's major indices, the Nifty 50 and Sensex, showed mixed results. The Nifty 50 closed 0.23% higher at 23,270.60 points, while the Sensex ended 0.1% lower at 74,314.59 points.

The Bank Nifty, however, declined 237 points to 56,055.75, dragged down by weak performance in private-sector and state-owned banks. Despite the mixed performance, the broader market trend was positive, with the Nifty Midcap 100 and Nifty Smallcap 100 both gaining 0.92% and 0.76%, respectively, outpacing the headline indices. Nearly two-thirds of stocks in the Nifty 500 universe closed higher on the day.

Vinod Nair, Head of Research at Geojit Investments, noted that investors were buying value stocks following recent corrections. Market sentiment remained cautious due to concerns over a potential broader rate-tightening cycle driven by ongoing tensions in the Middle East and the risk of U.S. tariffs. Sector-wise, pharmaceuticals, healthcare, real estate, automotive, media, and metals were among the top performers, while banking, FMCG, and oil and gas faced pressure.

Tata Group stocks outperformed the broader market, possibly indicating a value-unlocking signal for listed Tata entities, as the RBI rejected their proposal to exit the regulatory framework for Core Investment Companies. The dollar index rose above 100, reaching its highest level in over a month, while the U.S. 10-year Treasury yield hovered near 5%.

The Indian rupee briefly dropped below 96 per dollar before recovering, with suspected Reserve Bank of India intervention offering support. Analysts expect the rupee to remain under pressure, with traders watching the 96–96.20 range and immediate resistance at 96.25. Brent crude eased to around $104 a barrel, providing some relief to import-sensitive sectors, though a rebound toward $108–$110 could reignite selling pressure.

The India VIX, measuring near-term market anxiety, fell to around 12.25–12.29, suggesting some stabilisation even as macro headwinds persist. Technically, the Nifty formed a small-bodied candle with a long upper shadow, indicating indecision and selling pressure at higher levels. The index remains below its key short- and long-term moving averages, and the daily RSI has recovered from a recent low of 22.23 to around 31, pointing to tentative stabilisation.

The Nifty's immediate resistance zone is 23,300–23,400, with a decisive close above 23,400 potentially opening the path to 23,550. Break below 23,100 may intensify selling towards 22,950. Moving forward, markets are expected to remain range-bound and selective, with global bond yields, the dollar, and crude oil prices likely to determine whether Thursday's fragile recovery sustains in the coming sessions.