On Wednesday night, Powell indicated that he may soon begin cutting interest rates in the world's largest economy in 2024. This has led to a rally in stocks and bonds around the world, including in India, where the sensex has risen. 930 points or 1.3% to close at 70,514 points. – a new maxim. Nifty also closed at a new high of 21,183 points – up 256 points or 1.2% on Thursday.
The Fed's dovish narrative helped benchmark indices scale all-time highs, said Pranav Haridasan, MD and CEO, Axis Securities. Several factors have contributed to the current market recovery, he said. On the one hand, the recent drop in the US 10-year bond yield by almost 100 basis points (or one percentage point) from its recent peak has excited investors.
“The status quo (on interest rates) maintained by the RBI, with a positive revision in GDP growth rate in FY24 from 6.5% to 7%, sequential improvement in high-frequency indicators and robust growth expectations of profits, contributed to this boost.” Additionally, election results in three of the four key states raised expectations for political continuity in 2024, boosting market confidence, he said. The market could rise further “if bond yields and oil prices remain at the same levels throughout the month,” Haridasan said.
The day's rally was led by foreign funds that injected Rs 3,570 crore into equities alone, taking the month's net inflow to nearly Rs 43,000 crore, data from CDSL and BSE showed. Among the sensex constituents, Infosys, ICICI Bank and HDFC Bank contributed the most to the index's gains. Of the 30 constituents, 25 closed higher. The day's rally also added around Rs 4 lakh crore to investors' wealth, with BSE's market capitalization now at Rs 361.7 lakh crore, official data showed.