Indian Markets Surge as US Federal Reserve Implements Rate Cut

The Indian stock market soared on Thursday following the US Federal Reserve's decision to cut interest rates by 50 basis points, the first such reduction since 2020. Key indices such as Nifty and Sensex reached record highs, while certain sectors also saw notable gains.

The Indian stock market demonstrated a strong positive reaction on Thursday to the US Federal Reserve's decision to reduce interest rates by 50 basis points, marking the first decrease since 2020. The Nifty at the National Stock Exchange surpassed 25,500 for the first time, while the Sensex at the BSE soared to 83,684.18. Meanwhile, the Nifty Bank also hit a record high of 53,353.

The NSE Nifty 50 opened 0.47 per cent higher and the SE Sensex rose 0.51 per cent. During the initial hours of trading, key gainers included LTIMindtree, NTPC, Wipro, Tech Mahindra, and Infosys. Conversely, ONGC and Bharti Airtel were among the major losers.

Most sectors opened in the green, with the exceptions of Media and Oil and Gas. The US Federal Reserve's monetary policy committee decided to lower the target range for the federal funds rate by 50 basis points to a range of 4.75 to 5.0 per cent, a move widely anticipated by global investors.

Despite the rate cut, U.S. markets closed lower. The S&P 500 fell by 0.29 per cent to 5,618.26, the Nasdaq Composite declined 0.31 per cent to 17,573.30, and the Dow Jones Industrial Average dropped 103 points, or 0.25 per cent, ending at 41,503.10. Investors are now expecting rate cuts by central banks in emerging economies.

Deepak Ramaraju, Senior Fund Manager at Shriram AMC, commented, "The 50 bps rate cut was a surprise for some market participants. Future rate cuts may be fewer and more spread out, adding to market uncertainty." He added that the RBI might consider a rate cut later this year, while FII flows could return to India as the US dollar eases.

Varun Aggarwal, MD of Profit Idea, noted, "Technical analysis suggests a potential false downside breakout from the recent narrow range, keeping the short-term trend positive."

(With inputs from agencies.)