The Indian stock market witnessed a surge following a 0.25% interest rate cut by the US Federal Reserve. The Sensex climbed 328 points to 82,993, and the Nifty crossed 25,400. Experts believe that easing rates could strengthen the rupee, boost foreign investment, and benefit banks and IT companies.
Stock market Today: The decision by the US Federal Reserve to cut interest rates by 0.25% on Thursday had a direct impact on Indian markets. The BSE Sensex reached 82,993 in early trading, gaining 328 points, while the NSE Nifty traded above 25,400. The rate cut is expected to put pressure on the dollar and strengthen the rupee. Experts believe this will increase the interest of foreign investors, improve banks' lending capacity, and benefit the IT sector with new contracts.
Rally in Early Trading
At 9:21 AM, the BSE Sensex was trading at 82,993.98, up by 300.27 points. At the same time, the NSE Nifty had reached 25,408.25, showing a gain of 78 points. In early trading, shares of Tech Mahindra, ICICI Bank, TCS, Bajaj Finserv, and Trent were among the top gainers. Conversely, stocks like Hindalco, Bajaj Finance, Apollo Hospitals, SBI, and SBI Life Insurance recorded declines.
Impact of Fed's Decision
The Federal Reserve has cut its policy interest rates by 0.25 percent. Experts state that this move will increase pressure on the dollar index and strengthen the Indian rupee. Additionally, foreign portfolio investors may increase their investments in emerging markets, which will directly benefit the Indian market.
Increased Confidence for Foreign Investors
A reduction in interest rates means lower returns on US bonds. In such a scenario, emerging markets like India become more attractive to foreign investors. This could lead to an accelerated flow of capital into the Indian equity market. Market analysts believe that the influx of foreign investment can provide long-term strength to the Sensex and Nifty.
Relief for IT Companies
Easing interest rates in the US economy are expected to boost consumption and corporate spending. This could translate into new contracts for Indian IT companies. America is the largest market for the Indian IT sector, and positive economic activities there have a direct impact on these companies.
Lower interest rates will increase the lending capacity of banks. As loans become cheaper, consumer demand is also expected to accelerate. This is likely to have a positive impact on the margins of the banking and financial sectors. The surge in stocks like ICICI Bank and Bajaj Finserv in early trading is seen as an indication of this.
Rupee to Also Show Strength
Another impact of the Fed's interest rate cut could be seen on the rupee. With increased pressure on the dollar index, the rupee is likely to strengthen. A ber rupee can benefit import-related sectors. The costs for oil companies and the airline sector may also decrease.
Market experts suggest that if the Fed makes two more interest rate cuts by the end of this year, the rally in the Indian market could continue for a longer period. Currently, there is an atmosphere of enthusiasm in the market following the Fed's decision, and investor sentiment remains positive.
