Sensex, Nifty trade strong post-US Fed’s 50 bps rate cut
India’s frontline indices, the Sensex and Nifty, opened at all-time highs on Thursday after the US Federal Reserve announced a significant rate cut of 50 basis points, initiating an easing cycle that could lead to further reductions in the future.
As of 9:39 a.m., the Sensex surged by 687 points, or 0.83%, reaching 83,635, while the Nifty climbed 197 points, or 0.78%, to hit 25,575.
Banking stocks spearheaded the market rally, with the Nifty Bank index rising 468 points, or 0.89%, to settle at 53,246.
In early trading, both the Sensex and Nifty achieved new peaks, recording values of 83,684 and 25,587, respectively. Almost all shares in the Sensex were in the green, with notable gains from NTPC, Wipro, Axis Bank, Tech Mahindra, Infosys, Bajaj Finance, TCS, Kotak Mahindra Bank, Tata Motors, HDFC Bank, and Sun Pharma.
Investors also showed interest in midcap and smallcap stocks, with the Nifty Midcap 100 index rising 391 points, or 0.65%, to reach 60,144, while the Nifty Smallcap index increased by 108 points, or 0.56%, to 19,498.
Market analysts suggest that the significant rate cut by the Federal Reserve could usher in a consolidation phase for equity markets with an upward trend. “The Fed Chief Powell’s optimistic commentary regarding inflation moving sustainably towards 2% is promising for the US economy,” they noted.
Experts anticipate that the Fed’s rate cuts will lead to similar actions in India, with consumer price index (CPI) inflation remaining below the Reserve Bank of India’s target of 4% in recent months. They predict two rate cuts of 25 basis points each in India before March 2025, indicating a favorable market environment for rate-sensitive sectors, especially banking.
Asian Markets Reflect Positive Sentiment
Most Asian markets mirrored this upbeat sentiment, with Tokyo, Shanghai, Hong Kong, and Jakarta trading in the green. However, US markets experienced a slight decline on Wednesday.
Foreign institutional investors (FIIs) were active in the equity markets, purchasing shares worth Rs.1,153 crore on September 18, while domestic institutional investors also bought equities valued at Rs 152 crore on the same day.
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