Indian benchmark equity indices extended the bull run to fresh all-time highs on Thursday after the US Federal Reserve flagged the end of its tightening cycle and struck a dovish tone on the interest rate outlook. Gains were seen across all the sectors.
The BSE Sensex was trading 1005 points higher at 70,589. Nifty50 was trading at 21,205, up 280 points at around 1.45 pm.
Meanwhile, the market capitalisation of all listed companies on BSE increased by Rs 4 lakh crore to Rs 355.18 lakh crore.
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The Federal Reserve held interest rates steady for a third meeting and gave its clearest signal yet that its aggressive hiking campaign is finished by forecasting a series of cuts next year.
Officials unanimously decided to leave the target range for the benchmark federal funds rate at 5.25% to 5.5%, the highest since 2001. Policymakers penciled in no further interest-rate hikes in their projections for the first time since March 2021, based on the median estimate.
Nifty IT advanced 2.1%, led by HCL Tech, Infosys, Mhpasis, and Corgorge. Nifty Bank, Financial Services, and Realty also opened over 1% higher.
NBCC shares rose nearly 6% in early trade after the construction company secured work orders worth Rs 1,500 crore. Tanla Platforms shares also opened 8% higher amid high volume.
Experts View
The clear dovish message from the Fed yesterday has set the stage for a smart Santa Claus rally in the coming days, and this can even trigger a pre-election rally that can take the markets to a series of new highs, said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
“The takeaway from the Fed message yesterday is that the tightening cycle is over and three rate cuts are possible in 2024. The market expects four. The record-breaking rally in the Dow will send many indices to new records,” Vijayakumar said.
Deven Mehata, Research Analyst at Choice Broking, said, “Nifty can find support at 20,900, followed by 20,850 and 20,800. On the higher side, 21,020 can be an immediate resistance, followed by 21,100 and 21,150.”
Asian Market
Asian stocks broadly rallied on Thursday morning, after the US Federal Reserve flagged the end of its tightening cycle and struck a dovish tone for the year ahead.
Mainland Chinese bluechips edged up by 0.3%, while Hong Kong’s benchmark advanced 1.1%. However, Japan’s Nikkei slid 0.9%, weighed down by the yen’s sharp rally.
US Markets
The Dow jumped to a record high close above 37,000 points. Broader indexes also rose. The S&P 500 climbed 1.4% and the Nasdaq composite also added 1.4%. Wall Street has been mostly charging higher since October, largely on hopes that cuts to interest rates are on the way.
US Dollar Index Declines
The US dollar index, which measures the greenback against a basket of currencies, fell a further 0.32% to 102.53.
When the index falls, investors in the US see an opportunity for higher returns in India, which leads to an inflow of Foreign Institutional Investment (FII).
US Treasury yield slips below 4%
Benchmark Treasury yields slid to their lowest level since August 10. The 10-year Treasury yield pushed down further to as low as 3.9845%, breaking below the psychological 4% mark.
“The crash in the US 10-year yield to 4% will trigger large capital flows to India. The main beneficiaries will be the large caps, particularly the fairly valued large caps in banking. IT too is likely to attract buying,” Vijayakumar said.
Oil Trades Below $75
Oil prices rose in Asian trade on Thursday, extending previous gains, on a bigger-than-expected weekly withdrawal from U.S. crude storage and hopeful demand expectations after the U.S. Federal Reserve sent signals on lower borrowing costs in 2024.
Brent futures rose 23 cents, or 0.31%, settling at $74.49 a barrel. US West Texas Intermediate (WTI) crude rose 11 cents, or 0.16%, and settled at $69.58 a barrel.
FIIs Remain Net Buyers
Foreign institutional investors (FIIs) bought Indian shares worth Rs 4,710.8 crore on a net basis on Wednesday, while domestic institutional investors (DIIs) offloaded shares worth Rs 958 crore, according to provisional data from the National Stock Exchange.
Meanwhile, so far in December FIIs bought shares worth Rs 33,959 crore.
(With inputs from agencies)
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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
