Fed Confirms 2025 Rate Cuts: Key Levels to Watch as Nifty Eyes 23,000

On March 19, the Nifty and Sensex extended their winning streak for a third consecutive session, driven by strong buying in banking, oil & gas, and metal stocks. However, losses in FMCG and IT stocks capped the rally.

The ongoing market recovery is not just a short-term movement but is supported by key factors such as a decline in the dollar index and short-covering by foreign institutional investors (FIIs).

Indian equities are set for a strong opening on March 20, aiming for a fourth straight session of gains. Global cues remain favorable after the Federal Reserve reaffirmed its plan for two rate cuts in 2025. The GIFT Nifty signals a bullish start, with the benchmark index eyeing a breakout past the 23,000 mark.

Federal Reserve Policy and Market Impact

As widely expected, the Federal Reserve kept interest rates steady at 4.25-4.50 percent but warned of rising economic uncertainty, particularly regarding inflation risks tied to Trump’s proposed tariffs.

In response, policymakers raised their year-end core inflation forecast to 2.8 percent from 2.5 percent and lowered their 2025 GDP growth projection to 1.7 percent from 2.1 percent. The unemployment estimate was also revised upward to 4.4 percent. Fed Chair Jerome Powell acknowledged the challenge of quantifying the impact of tariffs on inflation but noted that surveys indicate inflation expectations are already rising.

Market Performance on March 19

On March 19, the Nifty nearly touched the 23,000 mark during intraday trade before closing near 22,900. Midcap and smallcap stocks outperformed, with the Midcap 100 and Smallcap 100 indices surging 2.6 percent and 2.43 percent, respectively.

“The recent market recovery is not just a one-day movement but is supported by key factors such as the dollar index correction from 110 to around 103, which is positive for equities,” said Ruchit Jain, Vice President of Technical Research at Motilal Oswal.

Among sectoral indices, Nifty PSU Bank, Metals, Oil & Gas, and Realty were the top performers, with gains of 2 percent, 1.26 percent, 1.04 percent, and 2.43 percent, respectively. However, FMCG and IT stocks weighed on sentiment. The Nifty IT index declined by 1.08 percent, reflecting concerns over slowing demand for IT services due to recession fears in the U.S.

Key Levels to Watch

• Nifty:
  • A decisive break above 23,000 could trigger a fresh breakout from the descending channel pattern, paving the way for higher targets at 23,800 and 24,200.
  • Support is seen at 22,800, while resistance is at 23,200.
• BankNifty:
  • The index closed near 49,700, decisively moving past the 50-EMA zone of 49,250.
  • With strong support from frontline banking stocks, it is poised to target 50,900 (200-period MA) and 51,800 in the coming sessions.
  • The expected daily range is 49,300 to 50,500.

Market Sentiment Indicators

• Put-Call Ratio (PCR):
  • The Nifty PCR dropped to 1.2 on March 19 from 1.29 in the previous session.
  • A PCR above 0.7 or exceeding 1 suggests traders are selling more Put options than Calls, signaling bullish sentiment.
  • A ratio below 0.7 or nearing 0.5 indicates higher selling in Calls than Puts, reflecting bearish sentiment.
• India VIX:
  • The volatility index rose 0.66 percent to 13.3 but remained in the lower range and below key moving averages.
  • This kept market volatility subdued, supporting bullish sentiment.

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