FIRST TRADE: Equities start at fresh highs as Fed delivers 50 bps rate cut; Nifty near 25,550

FIRST TRADE (September 19): Indian equities in Thursday's session started at fresh highs after a surprise 50 bps interest rate cut. At the start, Nifty was up 165.4 or 0.65 per cent at 25,542.95, while Sensex was up 0.64 per cent or 531.56 at 83,479.79.

Meanwhile, the high beta Bank Nifty also traded 0.34 per cent higher, just around 200 points shy from all-time highs. Furthermore, broader markets also traded strong.

US Fed opened the rate cut cycle with a bang with 50 bps cut in line with changed market expectations. From inflation is transitory to higher rates for longer, the Fed has come a long way to meet market expectations, noted 
Nilesh Shah, MD - Kotak Mahindra AMC.  Shah added that this rate cut will facilitate flows to the emerging market assets with weaker dollar and lower rates.

Analysts largely believe that the long pending rate cut or easing cycle by the US Fed will bode well for Indian equities.

Sectorally, there has been across-the-board buying, with recovery seen in the Nifty IT index which suffered a sharp blow in the previous day's trade of over 3 per cent. Nonetheless, other sectors like metal, consumer durables and realty stocks saw decent buying action.

Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services held that the big Fed rate cut by 50 bp has the potential to take equity markets into a consolidation phase with an upward bias. The Fed chief Powell’s remark that “we have gained greater confidence that inflation is moving sustainably towards 2 per cent is a very optimistic commentary on the US economy." At the same time, US growth continues to be solid and the labour market is good.
 
More rate cuts are expected from the Fed, going forward. The rate projections are 4.4 per cent by end 2024 and 3.4 per cent for end 2025. These will be big declines from the present 4.75 to 5 per cent rate. added Vijaykumar.

The expert said that amid the rate cut move, rate-sensitive stocks particularly banking turn more favourable for investors.

Asian markets 

Asian markets were seeing good gains after the Fed delivers a bumper rate cut. Japan's Nikkei meanwhile also showed resilience as yen fell against the dollar.