Sensex Up 600pts At Record 83,600, Nifty Above 25,500 On 50bps Cut

Indian benchmark indices BSE Sensex and Nifty 50 were trading at fresh all-time highs on Thursday, after Jerome Powell-led US Federal Reserve announced a 50bps rate cut on Wednesday evening.

At 10 AM, the BSE Sensex was at 83,538, up 590 points, or 0.71 per cent, while the Nifty 50 was at 25,531, up 154 points, or 0.61 per cent higher.

All the constituent stocks of the BSE Sensex, and most of the stocks on the Nifty 50 were also trading higher. Gains on both the benchmark indices were led by NTPC, IT and financial stocks

Across sectors, the IT index had climbed 1.55 per cent, followed by the Realty index (1.10 per cent). All other sectoral indices were also in the green.

In the broader markets too, the BSE MidCap was up 0.59 per cent, while the BSE SmallCap was up 0.43 per cent.

That apart, benchmark equity indices BSE Sensex and Nifty50 had pulled back from their respective record highs on Wednesday to close in the red.

The 30-stock BSE Sensex closed at 82,948.23, down 131.43 points, or 0.16 per cent, while the Nifty50 ended at 25,377.55, down 41 points, or 0.16 per cent lower.

In the run up to the US Fed’s announcement late on Wednesday, information technology stocks in India had posted their sharpest drop in over six weeks on Wednesday.

The Nifty IT Index closed 3.1 per cent lower at 42,089 on Wednesday, its biggest single-day decline since August 5. Its constituents Mphasis dropped by 5.6 per cent, followed by TCS closing lower by 3.5 per cent. L&T Technology Services, Persistent Systems, Infosys, and HCLTech also fell by over 3 per cent each.

Markets in the Asia-Pacific region were being led higher by Japan’s Nikkei 225, with Nikkei and Topix up about 2 per cent each.

Meanwhile, Hong Kong’s Hang Seng index futures pointed to a flat open for HSI, as they would return to trade after being closed for a public holiday on Wednesday.

The Taiwan Weighted Index was up 0.12 per cent, and South Korea’s blue-chip Kospi slipped 0.51 per cent after opening higher. The small-cap Kosdaq was up 0.25 per cent. Australia’s S&P/ASX 200 rose 0.15 per cent on open.

Futures of mainland China’s CSI 300 stood at 3,191 slightly lower than its Tuesday close at 3,195.76.

Major stock indices had closed with modest losses and the dollar gained ground in choppy trading on Wednesday after the US Federal Reserve opted for a supersized cut in its first move to borrowing costs in more than four years.

The central bank cut its overnight rate by half a percentage point, more than the quarter-point that is customary for adjustments, citing greater confidence that inflation will keep receding to its 2 per cent annual target.

The benchmark S&P 500 rose as much as 1 per cent after the announcement before retreating to close down 0.29 per cent at 5,618.26.

The Dow Jones Industrial Average closed down 0.25 per cent, at 41,503.10, and the Nasdaq Composite shed 0.31 per cent, to end at 17,573.30.

Rates had been parked at their highest levels in more than two decades since July 2023.

MSCI’s index of world stocks rose to a record high during the session before turning south. It was last quoted down 0.29 per cent at 826.29.

The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, weakened after the announcement before rising 0.07 per cent to 100.98.

In the market for US government debt, yields on rate-sensitive 2-year Treasuries, rose 3.8 basis points to 3.6297 per cent, from 3.592 per cent late on Tuesday.

The yield on benchmark 10-year notes rose 6.6 basis points to 3.708 per cent, from 3.642 per cent late on Tuesday.

Attention quickly turned to what the Fed would do next as it seeks to fulfil its two-part mandate to promote maximum employment and stable prices.

Chair Jerome Powell said he saw no sign of a recession, citing solid growth, lower inflation and “a labor market that’s still at very solid levels”. He also said the Fed might have started cutting sooner, on the back of a surprisingly weak July jobs report, if it had seen that data earlier.

Markets are now fully pricing in a cut of at least 25 basis points at the central bank’s next meeting in November, with a roughly 40 per cent chance for another 50 basis point cut.

Next up on a busy policy calendar is a Bank of England meeting on Thursday, which financial markets anticipate will keep interest rates on hold. The Bank of Japan is expected to do the same on Friday.

Gold fell 0.62 per cent to $2,553.67 an ounce, having touched record highs earlier this week.

Oil prices fell, as the rate cut was seen as a response to unease about the US labor market. Brent crude settled at $73.65 a barrel, losing 5 cents.