Indian Stock Markets Hit All-Time Highs Following US Federal Reserve Rate Cut

India’s frontline indices soared to all-time highs on Thursday after the US Federal Reserve implemented a significant rate cut of 50 basis points, initiating an easing cycle expected to lead to further reductions.

As of 9:39 a.m., the BSE Sensex surged by 687 points, or 0.83%, reaching 83,635, while the Nifty rose by 197 points, or 0.78%, to stand at 25,575. In early trading, both indices recorded new peaks of 83,684 and 25,587, respectively.

Banking stocks drove the market rally, with the Nifty Bank index climbing 468 points, or 0.89%, to 53,246. Nearly all shares on the Sensex were in positive territory, with notable gainers including NTPC, Wipro, Axis Bank, Tech Mahindra, Infosys, Bajaj Finance, TCS, Kotak Mahindra Bank, Tata Motors, HDFC Bank, and Sun Pharma.

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Smallcap and midcap stocks also experienced robust buying activity. The Nifty Midcap 100 index rose by 391 points, or 0.65%, to 60,144, while the Nifty Smallcap index increased by 108 points, or 0.56%, to 19,498.

Market experts noted that the Fed’s substantial rate cut could usher in a consolidation phase for equity markets with an upward bias. They highlighted Federal Reserve Chairman Jerome Powell’s optimistic comments about inflation trends in the US as a positive sign for the economy.

Analysts expect that the Fed’s rate cuts may influence similar reductions in India, especially as the Consumer Price Index (CPI) inflation has remained below the Reserve Bank of India’s target of 4% for the last two months. They predict two potential rate cuts of 25 basis points each in India before March 2025, creating a favorable scenario for rate-sensitive sectors, particularly banking.

Asian markets also reflected positive momentum, with Tokyo, Shanghai, Hong Kong, and Jakarta all trading in the green, although US markets closed slightly lower on Wednesday.

On September 18, foreign institutional investors (FIIs) purchased equities worth ₹1,153 crore, while domestic institutional investors added equities valued at ₹152 crore.