Trade Set Up: Nifty Ends Turbulent October, Awaits Key US Fed Rate Decision

The tumultuous month of October has come to a close, leaving the Nifty 50 index 2.8% lower, marking its first negative October since 2018. As investors await a crucial interest rate decision from the US Federal Reserve, the Indian market reflects on a challenging month that saw Foreign Portfolio Investors withdraw nearly $2.5 billion from Indian equities.

October's rollercoaster ride has kept investors on their toes, and they are now looking to the US Federal Reserve for guidance. The market is holding on to the 19,000 mark on the downside but has been unwilling to break past the 19,250 mark.

Foreign Portfolio Investors (FPIs) have been net sellers in Indian equities for two consecutive months, with an outflow exceeding $5 billion. These FPI outflows have contributed to the market's volatility, adding to the uncertainties of the month.

The market's performance is expected to be influenced by the recent earnings reports. Notable companies such as Larsen & Toubro, Bharti Airtel, Tata Consumer Products, Jindal Steel and Power, Britannia, Hero MotoCorp, Sun Pharma, and Tata Steel are among those that have released their results.

Larsen & Toubro expects to 'outperform' its financial year 2024 order inflow guidance by 10-12% and revenue growth by 12-15%. The company reported receiving orders worth Rs 89,153 crore in the last quarter, with 67% being international orders.

Bharti Airtel reported a net profit decline of 31.8% compared to the June quarter, but India revenue was up by 10.9% year-on-year. The company's overall customer base reached nearly 540 million across 16 countries.

Tata Consumer Products reported a net profit of Rs 359 crore and EBITDA margin expanded to 14.4% from 12.9% last year.

Market sentiment also depends on companies like Birlasoft, which reported constant currency revenue growth of 3.1%, higher than expected, and Reliance, ONGC, and OMCs, as the windfall tax on crude petroleum and diesel undergo changes.

In the futures and options market, Nifty 50's November futures added 0.8% with 84,500 shares in Open Interest, trading at a premium of 78.6 points. Nifty Bank November futures, on the other hand, shed 0.3% with 7,710 shares in Open Interest. Nifty 50's Put-Call Ratio decreased from 1.09 to 0.91.

The stocks to watch on Wednesday's trading session are determined by the F&O cues. Nifty 50 call strikes between 19,100 and 19,250 have seen Open Interest addition for this Thursday's expiry, with the 19,200 call having the maximum Open Interest addition. On the put side, the 18,900 and 19,100 strikes have seen Open Interest addition, while the 19,000 strike has seen Open Interest shedding.

Looking at global cues, Asian markets have opened higher ahead of the FOMC rate decision, with most major markets trading with strong gains. The Nikkei 225 in Japan opened 2% higher, and the Topix is up by a similar margin. The Kospi in South Korea is up 0.8%.

In the United States, benchmark indices posted their third consecutive monthly loss. The Dow Jones advanced 0.4%, the S&P 500 gained 0.65%, and the Nasdaq ended with gains of 0.5%.

As markets continue to navigate through uncertainty, both on the domestic and global fronts, investors are closely watching the US Federal Reserve's interest rate decision, hoping for clarity and direction in the days ahead. October may have been a challenging month, but with new developments on the horizon, there is hope for a more stable and positive outlook in the near future.