On Thursday, the Indian stock markets concluded the trading session with notable gains, driven by a major global monetary policy development. The S&P BSE Sensex surged by 236.57 points to finish at 83,184.80, while the NSE Nifty50 climbed 38.25 points to end at 25,415.80. Both indices hit fresh all-time highs early in the day, reflecting an initial wave of optimism.
The uplift in the benchmark indices was attributed to the US Federal Reserve’s decision to implement a 50 basis points rate cut, marking the beginning of its monetary easing cycle. This move was larger than market expectations and provided a significant boost to global financial markets. The Fed’s decision to lower rates was aimed at stimulating economic activity amid ongoing global uncertainties and was expected to enhance liquidity and reduce borrowing costs across economies.
Despite the positive performance of the benchmark indices, the broader market displayed a contrasting trend. Smallcap and midcap stocks experienced sharp declines, impacting numerous public sector undertaking (PSU) stocks from various sectors. This disparity indicates that while the broader market remains under pressure, key sectors contributing to the benchmark gains were more insulated from the prevailing market challenges.
In particular, the Nifty Bank and Nifty Financial Services indices performed well, benefiting from the anticipated positive effects of the Fed’s rate cut. Investors in these sectors responded favorably, expecting increased liquidity and improved financial conditions. Conversely, the Nifty IT sector faced a downturn, attributed to profit booking and apprehensions about the global economic impact of the rate cut. The Fed’s action led to concerns about a potential global economic slowdown, prompting investors to take profits from technology stocks that had previously surged.
Among the top gainers on the Nifty50 were NTPC, Titan, Nestle India, Kotak Mahindra Bank, and Tata Consumer Products. These stocks saw substantial gains, contributing positively to the index. On the other hand, BPCL, Coal India, ONGC, Adani Ports, and Shriram Finance emerged as significant decliners, reflecting sector-specific issues and investor profit-taking.
Vinod Nair, Head of Research at Geojit Financial Services, commented, “The benchmark indices ended with modest gains after achieving record highs, following the US Fed’s larger-than-expected interest rate cut and signals for further reductions.” He pointed out that the substantial rate cut raised concerns about a potential global economic slowdown, leading to profit-taking in midcap and smallcap stocks trading at high valuations. Nonetheless, domestic sectors such as banking and fast-moving consumer goods (FMCG) saw increased buying interest, buoyed by foreign inflows and expectations of additional monetary easing by the Reserve Bank of India (RBI) in the upcoming months.
Ajit Mishra, Senior Vice President of Research at Religare Broking Ltd, noted, “While banking and financials are showing resilience, other sectors are experiencing mixed trends.” He advised traders to maintain positions on both sides of the market and focus on index heavyweights. This strategy suggests a balanced approach to navigating the current market conditions, taking into account the mixed signals from various sectors and the overall economic outlook.
