The Federal Reserve, at its third meeting, decided to keep interest rates stable and signaled a series of cuts for next year. This decision comes after a period of aggressive rate increases.
Experts believe the Fed's dovish message will lead to a recovery in the coming days. VK Vijayakumar, chief investment strategist at Geojit Financial Services, said the tightening cycle is over and expects three rate cuts in 2024.
In Asian markets, stocks rose following the Fed's conciliatory tone. Mainland Chinese bluechips and Hong Kong's benchmark index advanced, while Japan's Nikkei fell on the yen's rally.
In the US, the Dow closed at an all-time high above 37,000 points. The S&P 500 and Nasdaq composite also rose. The US dollar index has fallen, leading to an inflow of Foreign Institutional Investment (FII) into India.
Benchmark Treasury yields hit their lowest level since Aug. 10, with the 10-year Treasury yield falling below the psychological 4% mark. Vijayakumar said this decline will lead to large capital flows into India, benefiting large caps in the banking sector and the IT sector.
Oil prices rose on expectations of lower borrowing costs in 2024. Brent futures settled at $74.49 per barrel, while U.S. West Texas Intermediate (WTI) crude settled at $69.58 per barrel.
Foreign institutional investors (FIIs) continued to be net buyers, buying Indian shares worth Rs 4,710.8 crore on Wednesday. Domestic institutional investors (DIIs), on the other hand, sold shares worth Rs 958 million. In December, FIIs bought shares worth Rs 33,959 crore.