Sensex and Nifty Surge After US Fed Rate Cut
The Indian stock market experienced a notable rise on Thursday, as the Sensex and Nifty indices gained momentum after the US Federal Reserve announced a 25 basis points cut in interest rates. The decision, which marked the first rate cut in 2025, led the BSE’s 30-share Sensex to increase by 415.21 points, reaching 83,108.92, while the broader Nifty rose by 110.8 points to start at 25,441.05.
This decision by the Fed, made by its key rate-setting panel, the Federal Open Market Committee (FOMC), is anticipated to have ripple effects globally, including in India. With the Fed signaling the possibility of two more quarter-point rate cuts later this year, market sentiment has shifted positively. This comes at a critical time as the Reserve Bank of India (RBI) is set to hold its monetary policy meeting from September 29 to October 1, where a similar rate cut is expected.
Experts are optimistic about the potential for a rate cut in India, particularly given the current economic climate. VK Vijayakumar, chief investment strategist at Geojit Investments, explained that the Fed's rate cut is a 'risk management cut' aimed at addressing uncertainties surrounding economic activity, unemployment, and inflation. As the labour market shows signs of cooling and GDP growth projections for 2025 are modest, the market is hopeful for further easing measures.
Deepak Agrawal, chief investment officer at Kotak Mahindra AMC, echoed these sentiments, noting that the increase in the unemployment rate is a significant factor influencing the FOMC's decisions. He emphasized that the Fed's willingness to ease monetary policy, even with higher inflation projections, boosts the chances of a rate cut by the RBI this October.
All broader market indices were trading positively on the day, with the Nifty IT index leading the charge with a 1.1 percent increase. Major gainers included prominent firms like Wipro Ltd, Infosys Ltd, HCL Technologies Ltd, and Tech Mahindra Ltd, reflecting a broader trend of positive sentiment in the market.
In conclusion, the US Fed's decision has not only buoyed the Indian markets but also set the stage for potential policy shifts from the RBI. Investors and market watchers alike are keenly awaiting the upcoming monetary policy meeting, which could bring further good news for the economy.
