US Fed hike pause lifts indices to all-time high
- IT companies were the top gainers, led by Infosys, Tech Mahindra and LTI Mindtree, all of which ended the session with gains of over 3.5% each
India’s benchmark stock indices rallied to fresh highs on Thursday after the US Federal Reserve brought the curtains down on interest rate hikes and indicated the possibility of three rate cuts in 2024.
BSE’s 30-stock Sensex jumped 929.60 points or 1.34% to close at 70,514.2 points. Though the index had crossed the 70,000 mark during Monday’s trading, this was the first time it ended the session above the milestone figure. The National Stock Exchange’s (NSE’s) Nifty 50 index rose 1.23% or 256.35 points to close at an all-time high of 21,182.7, after touching an intra-day peak of 21,210.9.
IT companies were the top gainers, led by Infosys, Tech Mahindra and LTI Mindtree, all of which ended the session with gains of over 3.5% each.
“The market has reacted to the Fed change in stance from ‘higher for longer’ to ‘not higher unnecessarily’,” said Nilesh Shah, managing director at Kotak AMC. “The IT sector, which was a laggard, is beginning to look attractive. But the two main triggers investors will watch carefully are hiring and shortening of the sales conversion cycle.”
The markets have already started to price in a 75-basis-point rate cut by the US Fed next year from the 50 basis points expected earlier, a mutual fund executive said on the condition of anonymity.
“The possibility of a rate cut is not as distant as it used to be,” said Nirav Karkera, head of research at investment platform Fisdom. “The fact that a pause in US Fed rate hikes, decline in US Treasury yields and a slump in the dollar index are all aligning at the same time is giving further confidence to investors.”
Foreign capital has also joined the party given the Indian market’s relative outperformance to most other emerging and developed markets, with an added premium for political stability.
Foreign portfolio investors (FPIs) made net purchases of ₹3,570 crore on Thursday, provisional data showed. With this, net FPI equity inflows have touched ₹39,260 crore in December so far.
Analysts expect foreign inflows to continue, aiding sectors such as IT, pharmaceuticals and banking.
“Despite expensive valuation, India stands out globally due to its positive outlook and fewer challenges in terms of economy and corporate earnings,” said S. Naren, executive director and chief investment officer at ICICI Prudential AMC.
Domestic macro-economic indicators have lifted sentiments as well. The Reserve Bank of India held interest rates steady last week, while raising its gross domestic product (GDP) growth projection for the current fiscal year to 7% from 6.5% earlier.
The Purchasing Managers’ Index (PMI) for manufacturing too climbed to 56 in November, up from 55.5 in October, though it remained below 57.5 reported in September.
Amid the exuberance, some experts have advised caution.
“When you’re in a party and everybody is dancing, dance, but don’t get drunk,” said investor Vijay Kedia. “We are in a red-hot bull market and those who haven’t boarded the train yet should stay cautious, while those who boarded long ago and have vision for another three to four years can stay put.”
nehal.chaliawala@livemint.com
Catch all the Business News , Market News , Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
- Top Gainers
- Top Losers
- 52 Week High