MARKET OPENS AT FRESH LIFE HIGH; ALL SECTORS IN GREEN

The key equity indices traded with major gains in early trade, mirroring global cues. The Nifty traded above the 25,550 mark. All the sectoral indices on NSE were in the green with IT, realty and bank shares gaining the most.

At 09:30 IST, the barometer index, the S&P BSE Sensex was rallied 674.97 points or 0.81% to 83,618.10. The Nifty 50 index advanced 192.45 points or 0.76% to 25,570.00.

The Sensex and Nifty clocked an all-time high of 83,359.17 and 25,587.10 respectively in early trade.

In the broader market, the S&P BSE Mid-Cap index added 0.70% and the S&P BSE Small-Cap index rose 0.47%.

The market breadth was strong. On the BSE, 2,078 shares rose and 835 shares fell. A total of 123 shares were unchanged.

Foreign portfolio investors (FPIs) bought shares worth Rs 1,153.69 crore, while domestic institutional investors (DIIs) were net buyers to the tune of Rs 152.31 crore in the Indian equity market on 18 September 2024, provisional data showed.

Economy:

Fed Cuts Rates for the First Time in Years, Signaling Policy Shift:

The US Federal Reserve made a significant policy shift on Wednesday, reducing interest rates by 50 basis points. This marks the first rate cut in over four years, signaling a potential easing of the restrictive monetary policy implemented to combat inflation. The Federal Open Market Committee (FOMC) justified the decision, citing progress in curbing inflation and a shifting balance of risks. The rate cut is expected to lower borrowing costs for consumers and businesses, stimulating spending and investment.

While the 50-basis point cut was at the higher end of market expectations, analysts anticipate further rate reductions in the coming months. The Fed hinted at two more 25-basis point cuts this year, but market sentiment suggests more aggressive easing could be on the horizon. Despite the optimism surrounding rate cuts, Federal Reserve Chair Jerome Powell tempered expectations. He emphasized that the central bank does not intend to return to the era of ultra-low interest rates seen during the COVID-19 pandemic. Powell indicated that the Fed`s neutral rate is likely to be higher than in the past, suggesting a less accommodative monetary policy stance going forward.

The Fed`s rate cut will have global repercussions, particularly in emerging markets like India. Lower interest rates in the US can influence capital flows and exchange rates, affecting these economies` financial conditions.

Stocks in Spotlight:

Ion Exchange (India) jumped 7.36% after the company announced that it has been awarded contracts worth Rs 161.19 crore from Adani Power for comprehensive & complete total water & environment management solution.

Power Grid Corporation of India rose 0.28%. The company has received a Letter of Intent for the project, which includes establishing a new 765/400/220 kV substation at Kurawar, along with 765 kV & 400 kV D/C transmission lines and associated bays extension works at other existing substations in Madhya Pradesh.

Numbers to Track:

The yield on India`s 10-year benchmark federal paper advanced 1.59% to 6.887 as compared with previous close 6.779.

In the foreign exchange market, the rupee edged higher against the dollar. The partially convertible rupee was hovering at 83.7300, compared with its close of 83.7650 during the previous trading session.

MCX Gold futures for 4 October 2024 settlement shed 0.16% to Rs 72,947.

The US Dollar index (DXY), which tracks the greenback`s value against a basket of currencies, was up 0.44% to 101.04.

The United States 10-year bond yield added 0.99% to 3.729.

In the commodities market, Brent crude for November 2024 settlement lost 2 cent or 0.03% to $73.63 a barrel.

Global Markets:

Dow Jones Futures were up 268 points, indicating a strong opening in the US stock market today.

Asian stocks surged on Thursday, buoyed by the Federal Reserve`s unexpected 50-basis point interest rate cut. Japanese shares climbed as the yen weakened ahead of the Bank of Japan`s policy meeting on Friday. The Bank of England is also scheduled to announce its monetary policy decision later in the week.

While the Fed`s rate cut provided a boost to regional markets, gains were tempered by the weak overnight performance on Wall Street. The outsized cut raised concerns about potential economic slowdown, leading to some cautious trading.

In China, investors await the central bank`s decision on the benchmark loan prime rate on Friday. Analysts generally expect no changes, given Beijing`s conservative approach to stimulus measures.

US stock market closed with modest losses and the dollar strengthened on Wednesday following the Fed`s rate cut. The S&P 500 declined by 0.29%, falling slightly below its all-time high. The Dow Jones Industrial Average and Nasdaq Composite also experienced minor losses. Trading in Tupperware Brands remained suspended after the company filed for Chapter 11 bankruptcy protection, sending its stock plummeting.

US retail sales, unadjusted for inflation, increased 0.1% in August after an upwardly revised 1.1% gain, pointing to healthy consumer demand that continues to underpin the economy. Excluding autos and gasoline stations, sales advanced for a fourth month.

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