Sensex, Nifty Scale Record High After Fed Rate Cut: What Analysts Say

Indian stock markets opened to a positive momentum following the US Federal Reserve rate cut on Wednesday. Benchmarks Sensex and Nifty scaled fresh lifetime highs on Thursday amid strong global cues.  

With the Fed cutting its interest rates by a massive 50 basis points, the Sensex jumped 688.55 points, or 0.83% higher at 83,636.77, as of 9:20 a.m. Nifty soared 80.45 points or 0.71% higher at 25,558.00. 

HDFC Bank Ltd., and Infosys Ltd. were the top gainers of Nifty 50 at open. 

The US Federal Open Market Committee cut the federal fund target range by 50 bps to 4.75% to 5.%. A further 50 basis points rate cut by the end of 2024 is also projected.

Based on the technical market pattern, Kotak Securities Executive Vice President and Head of Equity Research, Shrikant Chauhan, saw buying support between 25,300 and 25,200 levels.

“If there is any correction, it will be an opportunity for short-term traders to enter the long position. If there are some medium to long-term positions, you should start taking long bets in this market because markets are still above their important support levels,” he said.

Chauhan added that the Nifty 50 closing above 25,550 is something that will change the entire sentiment of the market. 

According to Goldilocks Premium Research Founder Gautam Shah, Indian markets have stood strong all along in the last few months and the Fed rate cuts have only refuelled the markets.

Not only did Sensex and Nifty scale lifetime highs today, the Nifty IT also rebounded as Infosys Ltd. and Tata Consultancy Services Ltd. lead the chart.

“A lot of the positives were already there and we wanted a new development which the market can latch onto to move significantly higher. With this development, a new momentum on the upside is building up,” Shah said.

The Fed rate cuts will be positive for emerging markets like India, Herald Van Der Linde, head of Asia equity strategy at HSBC, opined.

“For a moment, the easing rate cut cycle is going to accompany upticks. What we normally see is that the markets had anticipated these rate cuts. After it, we normally have a couple of months of good performances as well. Over the next few months, I suspect that risk assets will do good,” he said.

However, the rate cut is likely to put pressure on the Reserve Bank of India, Nirmal Bang Institutional Equities Chief Executive Officer Rahul Arora said.

“They will have to move their stance to neutral in the next meeting. We were forecasting our first rate cut in India in February, which may get advanced to December's meeting this year. I think the markets will digest it and move on,” he said.