Benchmark stock market indices soared to record highs on Thursday after the US Federal Reserve announced a significant 50 basis points (bps) interest rate cut. The rate cut, aimed at addressing inflation and stimulating the economy, had a positive impact on global markets, including India.
At 9:41 AM, the S&P BSE Sensex surged by 758.7 points, reaching an all-time high of 83,706.93, while the NSE Nifty50 gained 215.40 points, crossing the 25,500 mark for the first time, to trade at 25,592.95.
IT Stocks Lead the Rally
One of the key drivers behind this rally was the sharp gains in information technology (IT) stocks. The Nifty IT index was among the top performers, benefiting from the Fed’s rate cut due to its positive impact on US-based tech companies, which form a substantial part of the IT sector’s clientele.
Other sectoral indices such as Nifty Bank and Nifty Financial Services also posted strong gains as analysts voiced optimism about a stable outlook for global markets. High-weightage stocks including NTPC, Grasim, Titan, Bajaj Auto, and Axis Bank were among the top gainers on the Nifty50 index.
Key Movers in the Market
- Top Gainers: NTPC, Grasim, Titan, Bajaj Auto, and Axis Bank.
- Top Losers: ONGC, BPCL, HCLTech, Bajaj Finserv, and Dr. Reddy’s.
Expert Insights
Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, noted the optimism surrounding the Fed’s move. He stated, “The big Fed rate cut by 50 bps has the potential to take equity markets into a consolidation phase with an upward bias. The Fed chief Powell’s remark that ‘we have gained greater confidence that inflation is moving sustainably towards 2%’ is a very optimistic commentary on the US economy.”
He further added that more rate cuts are expected from the Federal Reserve, projecting the interest rate to fall to 4.4% by the end of 2024 and 3.4% by the end of 2025. These projections reflect significant declines from the current rates of 4.75% to 5%.
Impact on Indian Markets
The Fed’s rate cut is expected to pave the way for similar moves by the Reserve Bank of India (RBI). Vijayakumar mentioned that India could see two rate cuts of 25 bps each by March 2025, as inflation levels have come below the RBI’s target of 4% in the past two months. This is a favorable sign for rate-sensitive sectors, especially banking.
As markets rally on the back of this rate cut, investors and analysts are optimistic about continued growth, particularly in sectors directly benefiting from lower interest rates.
