The global market saw a surge following the US Federal Reserve’s dovish remarks, and Indian stocks were no different. Both the NSE Nifty and the BSE Sensex increased by more than 1% to reach new all-time highs. The benchmark indices saw a significant increase accompanied by gains in IT, banking, and index heavyweight RIL stocks.
Nifty IT index rose by almost 3% as expectations of a reduction in Fed rate coupled with Nasdaq’s gains
Perspective of the Market
A shrewd Santa Claus rally is expected in the next few days, and the Fed’s dovish statement yesterday has created the conditions for one. It may even spark a pre-election rally that propels the markets to new heights.
The Fed’s statement from yesterday suggests that three rate cuts in 2024 are feasible and that the tightening cycle is ended. The market anticipates four. Numerous indexes will reach new heights as a result of the Dow’s record-breaking surge.
The US 10-year yield’s collapse to 4% will result in significant capital flows to India. Large caps, especially the fairly valued ones in banking, will be the main winners. IT might also draw purchases.
The mid- and small-cap stocks can also rise due to retail exuberance, but this market is not comfortable with its valuation.