Sensex trades higher as US Fed Chair hints likely rate cut in September
Indian equity indices began Monday on a positive note, buoyed by gains in US markets after Federal Reserve Chair Jerome Powell‘s recent dovish remarks at the Jackson Hole Symposium. Powell’s hints at a possible rate cut in September provided a boost to investor sentiment.
As of 9:45 a.m. IST, the Sensex surged by 529 points, or 0.65%, reaching 81,615. Similarly, the Nifty advanced by 146 points, or 0.59%, to stand at 24,969.
The broader market also displayed a bullish trend. The Nifty Midcap index rose by 348 points, or 0.60%, to 58,904, while the Nifty Smallcap index gained 105 points, or 0.55%, climbing to 19,184.
Investors are optimistic as the market rallies in response to encouraging global cues.
Among the sectoral indices, Auto, IT, PSU Bank, fin service, pharma, metal, and energy are the major gainers and FMCG is the only loser in the NSE indices.
According to the market experts, “The Fed chief Powell’s clear message of the beginning of the rate cutting cycle will impart further resilience to the ongoing global rally in stock markets. Deviating from his usual cautious messaging, this time Powell unambiguously stated that “the time has come for policy to adjust” and that “the direction of travel is clear.” This will act as sort of a “Powell put” similar to the famous “Greenspan put” that supported US equity markets during the Greenspan era.”
In the Sensex, Wipro, Tech Mahindra, TCS, HDFC Bank, Infosys, Power Grid, Axis Bank, HCL Tech, Tata Motors and Tata Steel are the top gainers. ITC, Sun Pharma, Maruti Suzuki, JSW Steel, and UltraTech Cement are the top losers.
“Since core inflation in India is only 3 percent and economic growth is turning slightly sluggish, the MPC is likely to cut rates by 25 bp in the next meeting,” they added.
There is mixed trading in Asian markets. There is a rise in Bangkok, Hong Kong and Jakarta. Tokyo, Shanghai, and Seoul are in the red. The US markets closed with gains on Friday.
The foreign institutional investors (FIIs) extended their buying as they bought equities worth Rs.1,944 crore on August 23, while domestic institutional investors also bought equities worth Rs.2,896 crore on the same day.
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