Indian shares were relatively flat in morning trade on Wednesday, standing at around 83,036. The market showed mixed performance with a rise in financial services, banking, and auto sectors balancing out the declines observed in tech, pharmaceuticals, healthcare, and metals sectors.

Market Overview and Fed Policy Anticipation

The BSE Sensex had reached a new peak just a day prior, prompting traders to engage in profit-booking. The cautious trading comes ahead of the Federal Reserve's highly anticipated monetary policy decision, with market participants eager to learn the size of the rate cuts expected later today. The Federal Reserve’s decision could significantly influence market directions.

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China’s Rate Fixing and Trade Deficit

Market participants are also watching for China’s decision on benchmark lending rates this Friday, following the previous month’s maintenance of the 1-year loan prime rate at 3.35%. This decision could impact global financial markets and investor sentiment.

On the domestic front, India’s trade deficit expanded to a ten-month high of USD 29.7 billion in August 2024. This widening deficit was driven by a substantial 9.3% decrease in exports and a 3.3% increase in imports. The data highlights ongoing trade imbalances and may affect market sentiment.

Sector Performance

Among the early decliners were Tech Mahindra (-3.1%), Infosys (-2.7%), Wipro (-2.7%), LTIMindtree (-2.5%), and TCS (-2.4%). These declines reflect broader concerns in the tech sector, possibly influenced by global economic uncertainties and domestic factors.

Conversely, gains were recorded in Bajaj Finance (+2.5%), HeroMotoCorp (+1.6%), Shriram Finance (+1.6%), and HDFC Bank (+1.3%). These gains in the financial and auto sectors provided a counterbalance to the declines in other segments.

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Conclusion

The Indian stock market displayed a mixed performance as gains in select sectors countered the declines in others. The market remains focused on key events including the Fed's monetary policy decision and upcoming benchmarks from China, with broader implications for the global and domestic economic landscape.

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