Nifty, Sensex at record high, investors gain ₹3.4 lakh crore on US Fed policy; rate sensitives jump

The benchmark Nifty 50 index and Sensex opened at a record high following a dovish US Federal Reserve meeting outcome where interest rates were kept unchanged in the target range of 5.25-5.5%.

The Nifty-50 index opened at record highs of 21,110.40 significantly higher than previous close of 20,926.35 and scaled fresh highs of 21,189.55 surpassing the previous highs of 21,037.90. 

The Sensex also opened at 70,146.09 much higher than previous close of 69,584.60. It scaled highs of 70,540.0, crossing 70,500 mark for first time.

The gains were being led by Banks and Financial Services stocks. The rate sensitives saw huge buying on dovish Fed stance. The IT stocks and Realty stocks found favor.

Tech Mahindra, HCL Technologies, LTIMindtree, Bajaj Finance and Wipro stood amongst key Nifty gainers. Other prominent gainers included ICICI Bank, Infosys, Kotak Mahindra Bank, Bajaj Finserv and Tata Consultancy Services.

Nifty Midcap-100 index also scaled highs of 44,997.55 as it inched closer to 45,000 mark.

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The US Federal Reserve not only have kept rate unchanged but also indicated towards a three quarter-point cuts to their benchmark interest rate during the next year which led to the Dow closing above 37,000 for the first time as the Fed turned dovish, while the Nasdaq and the S&P 500 reached their best closing levels in almost two years.

The interest rate hike cycle coming to an end and at least three rate cuts expected in 2024 remain key positives for the market outlook.

Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd said that “This Thursday morning brings three positive developments: WTI Oil prices touching a five-month low at $69 a barrel, FIIs purchasing shares worth Rupees 4711 crores in yesterday's trade, and the 10-year US Treasury note yield falling below 4.1%, the lowest since early August".

 The Federal Reserve's decision to keep interest rates steady at 5.25%-5.5% for the third time aligns with market expectations, with the FOMC anticipating a slowdown in inflation to 2.4% in 2024, said Tapse. Market sentiment increasingly reflects expectations of a future interest rate cut, he added.

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Manish Chowdhury, Head of Research, StoxBox said that “We believe that the Fed has now acknowledged that previous rates hikes are working into the economy and a new challenge of managing a drastic slowdown or a probable recession awaits the central bank”  Chowdhury added that, our sense is that 2024 would be a good year for riskier assets overall and would not be surprised to see other major global central banks following suit in the latter half of next year.