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Late on Wednesday, Powell indicated that it could soon start cutting interest rates in the world’s largest economy in 2024. This led to a rally in stocks and bonds globally, including in India where the sensex rallied 930 points or 1.3% to close at 70,514 points – a new high.Nifty too closed at a new high of 21,183 points – up 256 points or 1.2% on Thursday.
The Fed’s dovish narrative helped benchmark indices scale all-time high levels, said Pranav Haridasan, MD & CEO of Axis Securities. Several factors have contributed to the current market rally, he said. For one, the recent fall in the US 10-year bond yield by nearly 100 basis points (or one percentage point) from their recent peak has enthused investors.
“The status quo (on interest rates) maintained by RBI, with a positive revision in FY24 GDP growth rate from 6.5% to 7 %, sequential improvement in the high-frequency indicators, and robust earnings growth expectations, contributed to this momentum.” In addition, the election results in three out of four key states have raised expectations of policy continuity in 2024, boosting market confidence, he said. The market can rally further “if the bond yields and the crude prices remain at the same levels for the entire month”, Haridasan said.
The day’s rally was led by foreign funds which net infused Rs 3,570 crore into stocks alone, taking the month’s net inflow figure to nearly Rs 43,000 crore, data from CDSL and BSE showed. Among the sensex constituents, Infosys, ICICI Bank and HDFC Bank contributed the most to the index’s gains. Of the 30 constituents, 25 closed higher. The day’s rally also added about Rs 4 lakh crore to investors’ wealth with BSE’s market capitalisation now at Rs 361.7 lakh crore, official data showed.
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