Indian Markets Surge After US Fed’s Surprise Rate Cut

The Indian benchmark indices experienced a significant boost this week, following a surprising 50 basis points rate cut by the US Federal Reserve. The Sensex crossed the 84,000 mark for the first time, while the Nifty reached a new all-time high.

Market analysts noted that concerns about a potential economic slowdown were alleviated by lower-than-expected US jobless claims, suggesting a soft landing for the US economy at the start of the rate cut cycle. This optimism has fueled bullish momentum, with expectations that the Nifty could approach levels between 25,900 and 26,000, although the latter may pose an immediate challenge.

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“On the downside, 25,500 serves as immediate support for the Nifty, followed by the 15-day exponential moving average near 25,300. As long as the Nifty remains above 25,600, a ‘Buy on Dips’ strategy is advisable for traders,” stated Hrishikesh Yedve from Asit C Mehta Investment Intermediates.

In response to the Fed’s decision, Indian markets have seen renewed buying interest, particularly in sectors that faced selling pressure earlier. Jateen Trivedi from LKP Securities pointed out that the resilience of the Indian markets is providing additional strength to the rupee, which is trading positively at 83.53, up 0.10, supported by ongoing weakness in the dollar index, now at 52-week lows.

Investors are shifting their focus towards large-cap stocks, especially in the consumption, staples, auto, finance, and real estate sectors. However, caution persists regarding export-oriented sectors like pharmaceuticals and IT due to dollar depreciation.

Meanwhile, gold prices have soared, reaching an all-time high of over $2,610 in Comex, driven by strong liquidity inflows from the US Fed’s significant rate cut. Analysts predict continued upward momentum for gold, with further rate cuts likely to boost prices even higher.