Opening Bell - Morning Commentary

Volatility on Fed Chair Drama

U.S. markets advanced modestly as a mix of strong bank earnings and cooler inflation readings helped calm investor concerns about ongoing trade tariff tensions.

Stocks experienced notable volatility mid-session after reports that President Trump was preparing to fire Fed Chair Jerome Powell. Stocks quickly rebounded when Trump clarified he was 'not planning' such a move, calming markets and easing volatility.

The S&P 500 rose 0.32%, while the Nasdaq climbed 0.10%, both closing at or near new highs. The Dow outperformed, up 0.53%, on strength in financials and healthcare.

Producer Price Index (PPI) data for June came in cooler than expected, aiding relief rallies. The softer inflation print reinforced expectations that the Federal Reserve may consider rate cuts later this year, despite the impact of tariff-related price increases.

The largest U.S. banks—JPMorgan Chase, Goldman Sachs, Morgan Stanley, Bank of America, Citigroup, and Wells Fargo—delivered strong second-quarter profits, outpacing analyst forecasts.

Proposed new tariffs from the White House created uncertainty, especially for multinational companies. However, a weaker dollar offered some earnings relief for firms with significant foreign sales.

Despite the Nasdaq’s fresh high, breadth was poor, and several tech leaders saw profit-taking. Investors favoured defensive and cyclical names amid ongoing volatility sparked by geopolitics and central bank policy uncertainty.

Back home, the Nifty 50 experienced an early dip, touching intraday lows at 25,121 yesterday. However, buying emerged at lower levels, initiating a smart recovery post-11 AM, which propelled the index to close modestly in the green, gaining 16 points or 0.06% to settle at 25,212. Among the sectoral indices, PSU Banks, Media, and IT ended as major gainers, while the Metal, Healthcare, and Pharma sectors ended in the red.

The crucial 50-day DMA support at 25000 for the Nifty remains intact. As long as this important level of 25000 holds, bulls are likely to maintain their dominance. On the upside, 25331 could offer short-term resistance in Nifty.

Indian markets are poised to open higher on the back of positive global cues. Weekly derivative expiry at the NSE will drive today's market activity after the opening.