Sensex and Nifty Reach Record Highs Following US Fed’s Rate Cut Announcement

Indian benchmark indices surged to all-time highs on Thursday after the US Federal Reserve announced a significant 50 basis point rate cut, signaling the start of an easing cycle that may lead to further reductions.

By 9:39 a.m., the Sensex had risen 687 points (0.83%) to reach 83,635, while the Nifty climbed 197 points (0.78%) to settle at 25,575.

Banking stocks drove the market’s gains, with the Nifty Bank index up 468 points (0.89%) at 53,246. During early trading, both the Sensex and Nifty reached new peaks of 83,684 and 25,587, respectively.

Almost all shares in the Sensex were in the green, with NTPC, Wipro, Axis Bank, Tech Mahindra, Infosys, Bajaj Finance, TCS, Kotak Mahindra Bank, Tata Motors, HDFC Bank, and Sun Pharma among the top performers.

Investor interest was also evident in smallcap and midcap stocks, with the Nifty Midcap 100 index rising by 391 points (0.65%) to 60,144 and the Nifty Smallcap index gaining 108 points (0.56%) to reach 19,498.

Market experts suggest that the Fed’s substantial rate cut could usher in a period of market consolidation with an upward trend. “Fed Chair Powell’s assertion that inflation is moving sustainably towards the 2% target paints a positive picture for the US economy,” they noted.

The expectation is that these rate cuts could lead to reductions in India as well, especially as CPI inflation has recently fallen below the RBI’s 4% target. Analysts predict two potential rate cuts of 25 basis points each in India before March 2025, which would benefit rate-sensitive sectors, particularly banking.

Asian markets are also performing well, with Tokyo, Shanghai, Hong Kong, and Jakarta trading in positive territory, while US markets experienced a slight decline on Wednesday.

On September 18, foreign institutional investors (FIIs) purchased equities worth Rs 1,153 crore, alongside domestic institutional investors, who bought shares valued at Rs 152 crore.