Sensex, Nifty hit fresh record highs after Fed delivers bigger than expected rate cut

The Indian equity benchmarks surged to new record highs on Thursday after the US central bank, US Federal Reserve, delivered bigger than expected rate cut for the first time in four years triggering a much-awaited rate easing cycle. The Sensex rose as much as 735 points to hit record high of 83,684.18 and Nifty 50 index touched an all-time high of 25,587.10.

As of 9:32 am, the Sensex climbed 625 points to 83,576 and Nifty 50 index advanced 185 points or 0.73 per cent to 25,562.

The Federal Reserve cut interest rates by half of a percentage point on Wednesday, kicking off what is expected to be a steady easing of monetary policy with a larger-than-usual reduction in borrowing costs that followed growing unease about the health of the job market.

"The US Federal Reserve cut key interest rates by 50 basis points to 4.75-5 per cent has significant implications for both the US and Indian economies. While US Fed Chair Jerome Powell highlighted the strength of the US economy, noting a cooling labour market and eased inflation, the decision raises questions about longer-term stability and potential risks," said Swapnil Aggarwal, Director, VSRK Capital.

"With the US dollar weakening, gold prices surged as investors turned to safer assets. This pattern is likely to continue if economic uncertainty persists, as gold is traditionally seen as a hedge against market instability. The initial weakening of the US dollar supported the Indian rupee, making imports less expensive and temporarily benefiting India’s trade balance," he added.

Buying was visible across the board as all the 13 sector gauges compiled by the National Stock Exchange were trading higher. IT shares were witnessing a strong buying interest, the IT index on the National Stock Exchange surged 1.6 per cent as they rate cut is seen as positive development for them because they earn substantial amount of revenue from US.

Nifty Bank, Auto, Financial Services, FMCG, PSU Bank, Private Bank and Realty indices were also trading on a strong note.

Mid- and small-cap shares were also witnessing buying interest as Nifty Midcap 100 index rose 0.7 per cent and Nifty Smallcap 100 index advanced 0.59 per cent.

NTPC was top Nifty gainer, the stock rose 2.76 per cent to Rs 425 after its subsidiary NTPC Green Energy filed papers for Rs 10,000 crore share sale via initial public offering.

LTI Mindtree, Wipro , Axis Bank , Tech Mahindra , Tata Motors, Tata Consultancy Services, Grasim and Bajaj Auto were also among the gainers.

On the flipside, ONGC , Bajaj Finserv, Hindalco, and Bharat Petroleum were among the notable losers.

The overall market breadth was positive as 2,048 shares were advancing while 848 were declining on the BSE.