SENSEX GAINS 233 PTS; PRIVATE BANKS RALLY FOR 6TH DAY

The key equity indices traded with minor gains in mid-afternoon trade. The Nifty traded above the 25,400 level. Private bank stocks rallied for the sixth consecutive trading session. Trading was volatile due to weekly F&O series expiry today.

At 14:30 IST, the barometer index, the S&P BSE Sensex added 233.19 points or 0.30% to 83,195.25. The Nifty 50 index rose 35.55 points or 0.14% to 25,413.10.

The Sensex and Nifty clocked an all-time high of 83,773.61 and 25,611.95 respectively in morning trade.

The broader market underperformed the frontline indices. The S&P BSE Mid-Cap index fell 1.49% and the S&P BSE Small-Cap index declined 1.80%.

The market breadth was weak. On the BSE, 959 shares rose and 2,989 shares fell. A total of 125 shares were unchanged.

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.

Buzzing Index:

The Nifty Private Bank index rose 0.38% to 26,603.80. The index advanced 3.95% in the six consecutive trading sessions.

Kotak Mahindra Bank (up 1.41%), HDFC Bank (up 0.98%), ICICI Bank (up 0.25%), Axis Bank (up 0.25%) and IndusInd Bank (up 0.13%) advanced.

On the other hand, Bandhan Bank (down 1.58%), City Union Bank (down 1.32%) and RBL Bank (down 0.57%) edged lower.

Numbers to Track:

The yield on India`s 10-year benchmark federal paper advanced 1.12% to 6.855 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 83.6400, compared with its close of 83.7650 during the previous trading session.

MCX Gold futures for 4 October 2024 settlement added 0.43% to Rs 73,372.

The US Dollar index (DXY), which tracks the greenback`s value against a basket of currencies, was up 0.01% to 100.60.

The United States 10-year bond yield rose 0.27% to 3.703.

In the commodities market, Brent crude for November 2024 settlement added 86 cents or 1.17% to $74.51 a barrel.

Stocks in spotlight:

Paradeep Phosphates slipped 4.53%. The company announced that its ammonia and urea plants at Goa have now resumed the production.

Shilpa Medicare tumbled 6.09%. The company informed that Sridevi Khambhampaty has been appointed as chief executive officer (CEO) of its wholly owned subsidiary, Shilpa Biologicals.

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