Sensex, Nifty hit record highs as US Fed signals end of rate hikes
News , The Indian Express
Domestic benchmark indices, the Sensex and the Nifty, scaled new highs on Thursday after the US Federal Reserve left the interest rates unchanged and signalled the possibility of three rate cuts in 2024
Story by Hitesh Vyas.
Domestic benchmark indices, the Sensex and the Nifty, scaled new highs on Thursday after the US Federal Reserve left the interest rates unchanged and signalled the possibility of three rate cuts in 2024.
The BSE’s 30-share Sensex gained 561 points, or 0.8 per cent, to open at a fresh high of 70,146.09. The index surged by 955 points to touch 70,540 for the first time in early morning trades. The Nifty advanced 184 points, or 0.9 per cent to open at a record high of 21,110.4.
The US Federal Reserve, in its monetary policy, kept the interest rates steady at 5.25-5.5 per cent. It also projected that the historic tightening of US monetary policy engineered over the last two years is at the end and lower borrowing costs are coming in 2024, according to a Reuters report.
“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 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, he said.
“The Fed members’ rate expectations stand at 4.6 per cent for December 2024 compared to 5.1 per cent in the previous dot plot. The market is pricing an 85 per cent probability of a rate cut in March, up from 40 per cent before the policy and close to a 100 per cent chance of a rate cut in May compared to 75 per cent before the policy,” IFA Global Research said in a note.
The crash in the US 10-year yield to 4 per cent will trigger large capital flows to India and the main beneficiaries will be the large caps, particularly the fairly valued large caps in banking.
“Retail exuberance can lift the mid and small caps, too; but there is no valuation comfort in this segment,” said Vijayakumar.
Foreign portfolio investors (FPIs) invested Rs 33959 crore into the domestic equity market so far in December.
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