Investors Focus on Federal Reserve’s Policy Decision Amid Strong Sectoral Gains

The Nifty 50 and Sensex extended their rally for the third consecutive session on March 19, supported by strong buying in banking, oil & gas, and metal stocks. However, weakness in FMCG and IT stocks limited the overall upside, preventing a broader breakout.

The session saw midcap and smallcap stocks significantly outperform, as the Nifty Midcap 100 and Smallcap 100 indices surged by 2.6% and 2.43%, respectively. The broader market remains in focus, with analysts expecting large-cap stocks to attract stronger inflows, followed by small caps.

At the closing bell:

Sensex advanced 147.79 points or 0.20%, closing at 75,449.05.
Nifty 50 climbed 73.30 points or 0.32%, settling at 22,907.60.
Market breadth was positive, with 2,897 stocks advancing, 989 declining, and 110 remaining unchanged.

Market Drivers: Institutional Buying and Dollar Weakness

Several factors contributed to the continued uptrend in equities:

Decline in the U.S. Dollar Index
- The Dollar Index has dropped from 110 to 103, making emerging markets like India more attractive to foreign investors.
Foreign Institutional Investors (FIIs) Covering Short Positions
- FIIs have increased their long-short ratio in index futures from 14-15% to 25%, signaling a shift towards optimism.
- FIIs also turned net buyers in the cash segment, investing over ₹1,000 crore in the last session.
Strength in Banking, Metal, and Realty Stocks
- Nifty PSU Bank climbed 2%, as banking stocks continued to see strong quarterly earnings momentum.
- Metals gained 1.26%, benefiting from lower dollar strength and positive trade policies.
- Oil & gas and realty sectors rose by 1.04% and 2.43%, respectively, extending their recent gains.

Global Focus on U.S. Federal Reserve’s Policy Decision

Market sentiment is being shaped by the upcoming Federal Open Market Committee (FOMC) meeting, scheduled for March 19-20.

The Federal Reserve is expected to keep interest rates unchanged at 4.25%–4.5%.
Updated economic projections will be released, influencing global risk appetite.
A hawkish stance from the Fed could increase volatility, particularly for interest rate-sensitive sectors such as IT and banking.

IT Stocks Decline on Global Demand Concerns

While most sectors gained, IT stocks witnessed sharp declines, mirroring weakness in global tech stocks. The Nifty IT index fell 1.08%, weighed down by:

Concerns over a slowdown in U.S. tech spending amid recession fears.
Uncertainty regarding future interest rate movements, impacting capital investments in IT services.

Top IT laggards included:

Tech Mahindra, TCS, Infosys, Wipro, and HCL Tech, all recording losses.

Steel Stocks Rally on Government Trade Protection Measures

Steel stocks outperformed after the Directorate General of Trade Remedies (DGTR) recommended imposing a provisional safeguard duty on Flat Steel Products to curb rising imports. This move, reported by CNBC-TV18, is aimed at protecting domestic steelmakers.

Leading steel stocks gained up to 4% intraday, including:

Tata Steel, JSW Steel, SAIL, and Jindal Steel.

Defence and Shipping Stocks Continue to Surge

Investor optimism remained high in the defence and shipping sectors, leading to another session of strong gains.

The Nifty India Defence index surged nearly 6% intraday, tracking renewed bullish sentiment.
Garden Reach Shipbuilders & Engineers (GRSE), Cochin Shipyard, and Hindustan Aeronautics Ltd (HAL) saw gains of up to 20%.
Increased government spending on defence contracts and naval projects is driving investor confidence.

Technical Analysis: Nifty Poised for a Breakout at 23,000

According to Sameet Chavan, Chief Technical Analyst at Angel One:

Nifty 50 is eyeing a breakout above the 23,000 level, which aligns with key resistance points.
A successful breakout could push the index towards 23,400 and beyond.
Immediate support is seen at 22,650–22,700, which could hold in case of short-term profit booking.
The Federal Reserve’s policy decision remains a key trigger for the next major market move.