 "US Fed Rate Cut News,Jerome powell")
Jerome Powell, the 16th chair of the Federal Reserve Bank of the US.
Indian equity benchmarks gained on Monday after Federal Reserve Chair Jerome Powell’s dovish statement at the Jackson Hole meeting fuelled a global rally.
The Sensex ended the session at 81,698, with a gain of 612 points or 0.75 per cent, marking its fifth straight day of gains. The Nifty ended the session at 25,011, gaining 188 points or 0.8 per cent. This was the eighth straight day of gains—its longest daily winning streak since July 6, 2023.
The Nifty also closed just shy of its record closing high of 25,010.9 on August 1. Meanwhile, the Sensex is 169 points or 0.3 per cent away from its all-time closing high.
The total market capitalisation of BSE-listed firms ended at Rs 462.3 trillion, with a gain of Rs 2.3 trillion. Foreign portfolio investors bought shares worth Rs 483 crore, while domestic institutional investors also pumped in Rs 1,870 crore.
Federal Reserve Chief Jerome Powell said on Friday that the time has come for the US central bank to cut rates. The Fed chief said that the pace of rate cuts will depend on incoming data. Further, Powell said he is confident that inflation is on a sustainable path to reaching the Fed’s target of 2 per cent.
Though the Fed chief’s comments did not clarify what the US central bank will do after the September meeting, they cheered markets. The Fed has held its benchmark rates in the range of 5.25 to 5.5 per cent, its highest levels in more than two decades.
Recent weak data on employment has led to criticism that the Fed’s high rates may push the US economy into recession. Post Powell’s speech, the debate has shifted to the size of the rate cut, with some betting on a 50 basis point cut in September. However, a 50 bps cut would indicate that the US economy is not that resilient.
“Indian equities celebrated the festive day by regaining the 25,000-mark after the US Fed indicated that interest rate cuts are most likely to start from its September meeting. The index is now just inches away from its life high. We expect the momentum to continue towards new highs with broader market participation. This week, the market will focus on India and US GDP data, derivatives monthly expiry, and other global cues,” said Siddhartha Khemka, head of retail research for Motilal Oswal Financial Services.
The gains in the global markets were capped by escalating tensions in the Middle East after an Israeli attack on Hezbollah’s missile launchers in Lebanon, which has also made investors nervous. Brent crude was trading at $80 per barrel, a 1.3 per cent gain on Monday.
“We maintain our optimistic outlook given the favourable global cues and recommend a ‘buy on dips’ strategy. While there has been some selective participation from the banking sector, more decisiveness among major private banks is needed to maintain the momentum. Traders should adjust their positions accordingly, with a focus on stock selection,” said Ajit Mishra, SVP of research at Religare Broking.
Most of the gains in the Sensex were driven by HDFC Bank and Reliance Industries. IT firms, which earn a significant portion of their revenues from the US, also contributed to the gains.
First Published: Aug 26 2024 | 6:56 PM IST
