The Indian stock market on Thursday reacted with a strong positive sentiment to the US Federal decision that reduced interest rate to 50 basis points, marking the first decrease since 2020.
The Nifty at the National Stock Exchange crossed 25,500 for the first time ever, while the Sensex at the BSE rose to 83,684.18. The Nifty Bank also hits a record high of 53,353.
On Thursday, the NSE Nifty 50 opened 0.47 per cent higher and SE Sensex rose 0.51.
In the initial hour of the trading at NSE, the stocks of LTIMindtree, NTPC, Wipro, Tech Mahindra and Infosys were among the major gainers. On the other hand, the major losers were ONGC and Bharti Airtel.
All the sectors on the indices opened in the green territory, except Media and Oil and Gas.
Investors around the globe were expecting the rate cut by the US Fed. The US Federal Reserve monetary policy committee decided to lower the target range for the federal funds rate by 50 basis points to 4.75 to 5.0 per cent.
In U.S. markets, stocks closed lower following the Fed’s rate cut. The S&P 500 fell 0.29 per cent to 5,618.26, the Nasdaq Composite declined 0.31 per cent to 17,573.30, and the Dow Jones Industrial Average dropped 103 points, or 0.25 petr cent, to end at 41,503.10.
Following the Fed decision, investors are expecting a rate cut by central banks in the emerging economies.
Deepak Ramaraju, Senior Fund Manager, Shriram AMC said, “It was a surprise element for a few market participants. With this 50 bps rate cut, the Fed has to wait for the incoming macro data before taking the next monetary decision. It’s likely that future rate cuts might be lower and spread out. This will continue to add to uncertainty in the equity markets. The equity markets reacted negatively and ended in the red.”
“We can expect the broader Emerging economies to undertake rate-cut decisions. On the domestic front, RBI will focus on the data and might likely undertake a rate cut in December or 4Q FY 25. The FII flows can be outbound in the short term and as the US dollar starts easing, the flows can come back into India. The markets are expected to remain in range with positively biased,” he added.
“Technical analysis suggests that a potential false downside breakout could occur from the recent narrow range, keeping the short-term trend positive,” Varun Aggarwal MD, Profit Idea.