Investors optimism drives markets to record high after Fed's 50 bps rate cut

Last Updated23/09/2024

This is the first rate cut by the US Federal Reserve since early 2020. The move shows that the focus of the Fed has now shifted from fighting inflation to supporting economic growt

India’s domestic stock market indices Sensex and Nifty surged to record highs on positive investor sentiment following the US Federal Reserve's bold move to cut its interest rates by 50 basis points (bps).
This shift in policy ignited optimism in global equity markets, including India.
The BSE Sensex climbed 410.94 points (0.50%) to reach an all-time high of 83,359.17, while the Nifty 50 gained 109.5 points (0.4%) to open at a record 25,487.05.
The significant rate cut signals a shift in the Federal Reserve's priorities from controlling inflation to fostering economic growth.
Fed Chair Jerome Powell’s statement that “we have gained greater confidence that inflation is moving sustainably towards 2%” further bolstered investor confidence.

Market analysts believe this move could help consolidate equity markets with an upward bias. Nilesh Shah, Managing Director of Kotak Mahindra Asset Management, remarked that the rate cut would facilitate flows into emerging markets due to a weaker US dollar and lower interest rates, making Indian equities attractive.

The cut also positively impacted IT stocks in India, with the Nifty IT index gaining 1% to open at 42,551. Among the top gainers were NTPC Ltd (2.72%), LTIMindtree Ltd (2.2%), Wipro (1.96%), Tech Mahindra (1.43%), and Bajaj Finance (1.31%).
This rally reflects growing investor confidence in the Indian economy as global conditions, particularly in the US, appear to support emerging market growth.