Indian Benchmark Indices Rise After US Fed Rate Cut

Market Update at 10:30 AM: Indian equities traded higher on Thursday, supported by gains in information technology stocks, after the U.S. Federal Reserve reduced interest rates by 0.25 percentage point to strengthen the labour market in the world’s largest economy.

The Nifty 50 index rose 0.36 per cent to 25,420.85, while the BSE Sensex climbed 0.42 per cent to 83,048.35 as of 09:51 a.m. IST. Market participation remained broad, with 14 out of 16 sectors advancing. The IT index , which derives a large share of revenue from the U.S., gained as much as 1.3 per cent.

Meanwhile, Small-Cap and Mid-Cap indices each advanced by about 0.4 per cent, extending their positive momentum. Market experts noted that lower U.S. interest rates often make emerging markets like India more attractive for foreign portfolio investors (FPIs), potentially boosting liquidity for Large-Cap, mid-cap, and small-cap stocks.

The Fed’s decision marks its first rate cut this year, but policymakers signalled a cautious stance on the pace of future moves. Investors now await domestic Quarterly Results, potential dividend announcements, and updates on IPO activity to gauge market direction further.

Pre-Market Update at 7:30 AM: On Thursday, September 18, Indian equity benchmark indices Sensex and Nifty 50 are expected to open higher, extending the previous day’s rally. The momentum comes after the US Federal Reserve announced a 25-basis-point cut, bringing its benchmark rate to 4 per cent–4.25 per cent. At 7:17 AM, the GIFT Nifty traded near 25,500, up by 77 points, indicating a positive start for Indian markets.

The Federal Reserve highlighted labour market stress as the main factor behind the rate cut and signalled that future moves would depend on economic data. Fed Chair Jerome Powell stressed that employment risks have become more significant than inflation, though inflation monitoring continues. The Fed projected two more quarter-point cuts later this year. US markets reacted cautiously, with the Dow Jones Industrial Average gaining 0.57 per cent to 46,018.32, while the S&P 500 and Nasdaq Composite slipped 0.10 per cent and 0.32 per cent, respectively.

On Wednesday, September 17, Foreign Institutional Investors (FIIs) were net sellers, offloading equities worth Rs 308.32 crore. In contrast, Domestic Institutional Investors (DIIs) continued their buying streak, investing Rs 2,293.53 crore. Notably, DIIs have been net buyers for 17 consecutive sessions, supporting large-cap and mid-cap stocks despite global uncertainty.

On Wednesday, the NSE Nifty 50 closed 0.36 per cent higher at 25,330.10, its strongest close since June 7, while the S&P BSE Sensex gained 313 points, or 0.38 per cent, to settle at 82,694. The Bank Nifty also advanced 0.63 per cent to 55,493.30. Sector-wise, IT, Auto, and Oil & Gas stocks gained, whereas metals declined. Broader markets were mixed, with mid-cap indices posting marginal gains and small-cap stocks rising up to 0.68 per cent, continuing their momentum and attracting interest from retail investors.

Asian markets traded mostly higher on Thursday, supported by the Fed decision. Meanwhile, China’s central bank maintained the rate of seven-day reverse repos at 1.40 per cent but injected 487 billion yuan (USD 68.56 billion) into the system through open market operations.

Gold prices gained 0.3 per cent in the Asian session to USD 3,668.57/oz, supported by expectations of more rate cuts, which enhance the appeal of the non-interest-bearing asset. Crude oil prices extended losses, with WTI futures falling below USD 64 per barrel and Brent futures slipping below USD 67 per barrel as traders assessed US stockpile data and monetary policy changes.

The US dollar index initially dropped to 96.224, its lowest since February 2022, immediately after the Fed announcement but later recovered to 97.074. The Indian rupee also appreciated against the US dollar, supported by strong DII flows and positive sectoral cues.

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Disclaimer: The article is for informational purposes only and not investment advice.