Benchmark Nifty 50 index is poised to open higher on Thursday, January 4, signaling a potential rebound after a two-session dip from near-record highs. Investor sentiment is influenced by ongoing concerns about the timing of US rate cuts.

As of 8:15 am IST, GIFT Nifty was trading at 21,627.50, indicating an opening above Wednesday's close of 21,517.35 points for the NSE Nifty 50.

Profit booking opportunity amid swift rally

"Over the past few weeks, the rally was sharp and swift," said Prashant Tapse, Senior Vice President of Research at Mehta Equities. Expensive valuations have prompted investors to seize the opportunity to book profits, Tapse added.

“Amidst a prevailing atmosphere of pessimism, the Nifty faces a challenging start to the new year, marked by significant volatility and profit-taking on Dalal Street. While the first three trading days reflect a downturn in equity, caution is advised against premature panic,” Tapse added.

“The Nifty's technical landscape sees bears capitalising on overbought conditions, with key resistance at 22,000 and support at 21,307. The outlook is shadowed by anxiety over weak IT stock earnings. Trading strategies involve cautious moves on Nifty and Bank Nifty, while bullish prospects are highlighted for Adani Ports, Coal India, Zee Entertainment, and SBI”, Tapse said.

The Nifty 50 reached an all-time high in the first session of 2024 but has retraced about 1 per cent since then. The index recorded a remarkable 20 per cent gain in 2023, with over half of the surge occurring in the final two months, driven by heightened expectations of a US rate cut in the first half of 2024.

Uncertainty looms over US rate cut timing

However, uncertainties persist as the minutes of the Federal Reserve's recent policy meeting provided no clear indications of the timing of a potential rate cut, despite the majority of officials anticipating 75 basis points of cuts in the coming year. The likelihood of a 25 bps cut in March dipped to 66.5 per cent, down from 73.9 per cent a week ago, according to CME's FedWatch tool.

In response to the global market scenario, Wall Street equities experienced a decline overnight, and Asian markets opened lower.

Stocks to watch

• Life Insurance Corporation of India: The insurer faces tax demands totaling Rs 668 crore from three states.
• Indian Energy Exchange: Total volumes rose by 14.9 per cent year-on-year in December.
• LTI Mindtree: The company received a tax demand notice for Rs 206 crore.

(With Reuters inputs.)