The Indian stock market experienced a surge on Thursday, responding positively to the US Federal Reserve’s decision to cut interest rates by 50 basis points—the first reduction since 2020. The Nifty at the National Stock Exchange surpassed the 25,500 mark for the first time, while the Sensex at the BSE climbed to 83,684.18. The Nifty Bank also hit a record high of 53,353.
On Thursday, the NSE Nifty 50 opened 0.47% higher, and the Sensex rose by 0.51%. In the early trading hours, stocks such as LTIMindtree, NTPC, Wipro, Tech Mahindra, and Infosys emerged as major gainers, while ONGC and Bharti Airtel were among the significant losers. Most sectors saw positive openings, except for Media and Oil and Gas.
Global investors had anticipated the Fed’s rate cut, which adjusted the target range for the federal funds rate to 4.75% to 5.0%. In the US markets, however, stocks closed lower following the announcement, with the S&P 500 down 0.29% at 5,618.26, the Nasdaq Composite falling 0.31% to 17,573.30, and the Dow Jones Industrial Average decreasing by 103 points, or 0.25%, to finish at 41,503.10.
Following the Fed’s decision, investors are now looking for potential rate cuts from central banks in emerging economies. Deepak Ramaraju, Senior Fund Manager at Shriram AMC, noted, “The rate cut surprised some market participants. The Fed will likely await incoming macro data before making further monetary decisions, which could mean that future cuts might be less aggressive and more spaced out. This adds uncertainty to equity markets, which reacted negatively and ended lower.”
He added, “Emerging economies may consider rate cuts as well. Domestically, the RBI will be data-focused and may implement a rate cut in December or the fourth quarter of FY25. While foreign institutional investor (FII) flows may be outbound in the short term, they could return to India as the US dollar weakens. Overall, the markets are expected to remain in a range with a positive bias.”
Varun Aggarwal, MD of Profit Idea, mentioned, “Technical analysis indicates that a false downside breakout might occur from the recent narrow range, keeping the short-term trend positive.”