Sensex, Nifty rally after Fed holds rates, foreign buying resumes
India's Sensex rose more than 700 points and Nifty 50 approached 22,900 after the US Federal Reserve left interest rates unchanged, adding nearly Rs 3 lakh crore to BSE-listed companies' market value.
By early afternoon trade, the Sensex had climbed above 73,956 and the Nifty 50 was up close to 200 points, nearing 22,900. Smaller and mid-sized stocks joined the advance, with the Nifty Smallcap 100 and Nifty Midcap 100 both up as much as 0.6%. Total BSE market capitalisation rose past Rs 475 lakh crore.
Adani Ports led blue-chip gainers, up more than 4%, while Power Grid, Kotak Mahindra Bank, Hindustan Unilever, NTPC, ITC, Reliance Industries, Titan, TCS and Infosys each added 1-3%. Among sector gauges, Nifty FMCG rose about 2%, PSU banks and IT stocks gained up to 1%, while auto shares slipped. Advancing stocks on the NSE outnumbered decliners 1,995 to 1,228.
The US Federal Reserve kept its benchmark rate at roughly 3.9%, with Fed Chairman Kevin Warsh signalling that existing policy was already affecting the economy. Markets are still pricing in a near 85% chance of a further quarter-point hike at the Fed’s December meeting, based on CME FedWatch data.
Foreign institutional investors bought Indian shares worth about Rs 872 crore, extending a run of modest purchases after a heavier earlier selloff. The rupee firmed 11 paise to 95.17 per US dollar as the greenback softened following the Fed decision, while the 10-year US Treasury yield slipped back below the 5% level and the 2-year yield eased to 4.69%.
Sentiment was also helped by growing expectations that New Delhi could ease long-term capital gains tax rules, after Finance Minister Nirmala Sitharaman confirmed that discussions on capital gains and securities transaction tax were underway.
Geojit Investments’ V K Vijayakumar cautioned that elevated crude prices and a still-high 10-year US yield remain headwinds for Indian markets despite the Fed’s pause.
A dovish Fed pause and falling US Treasury yields tend to support emerging-market equities and currencies such as the rupee, while renewed foreign buying and tax-policy expectations are key drivers investors are watching for Sensex and Nifty direction.
Source: Economic Times Markets