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Indian stock markets opened higher on Friday, buoyed by the U.S. Federal Reserve’s aggressive 50 basis point interest rate cut and signals of further easing. The benchmark Sensex surged over 400 points to 83,603.04 at the open, while the Nifty 50 index climbed to 25,525.95, up from Thursday’s close of 25,415.80.
Metal stocks led the gains in early trade, with JSW Steel, Coal India, Tata Steel, and Hindalco among the top performers on the Nifty, rising between 1.80 per cent to 3.15 per cent. HDFC Life also saw strong buying interest, up 1.71 per cent.
The positive sentiment was largely driven by the Fed’s decision to slash rates by half a percentage point, its first cut in four years. “The Dow ended above 42,000 for the first time ever, while also logging a record close alongside the S&P 500,” noted Deepak Jasani, Head of Retail Research at HDFC Securities.
However, some experts cautioned about potential volatility. “Sell on news is the phenomenon seen in Indian markets – especially in the broader markets. A small dip in the markets is likely,” Jasani added.
Asian markets also extended their rally, with Japan’s Nikkei surging 2 per cent ahead of the Bank of Japan’s policy decision. China’s central bank held its benchmark lending rates steady, disappointing hopes for immediate policy support for its struggling economy.
On the domestic front, S&P Global projected India’s economy to grow at 6.7 per cent annually between now and 2030-31, potentially making it the world’s third-largest economy.
Prashanth Tapse, Senior VP (Research) at Mehta Equities Ltd, expressed optimism: “The Nifty is set to rally towards new record highs, buoyed by a 50 basis point Fed rate cut and optimism for a soft economic landing.”
However, some analysts urged caution. Ameya Ranadive, Sr Technical Analyst at StoxBox, noted, “The Nifty50 exhibited a robust opening, with an initial surge of over 100 points, subsequently attaining new peak levels of 25611 due to the Federal Reserve’s 50 basis points rate reduction. However, the broader indices, particularly the midcap and smallcap segments, encountered considerable selling pressure within the initial minutes of trading.”
Foreign Institutional Investors (FIIs) were net sellers on Thursday, offloading equities worth ₹2,547.53 crore, while Domestic Institutional Investors (DIIs) were net buyers to the tune of ₹2,012.86 crore.
In the commodities market, gold prices surged to $2,590.25 per ounce, benefiting from the Fed’s rate cut decision. Crude oil futures traded lower, with Brent crude at $74.75 per barrel, down 0.17 per cent.
Vikas Jain, Head of Research at Reliance Securities, commented on sector-specific movements: “Sugar stocks will be in focus on account of international sugar prices reaching a 4-month high. Rising base metal prices, hope of China cutting mortgage rates, and the Dollar Index falling to a 14-month low may be positive for metal stocks.”
As the markets navigate the implications of global monetary policy shifts and sector-specific developments, investors are advised to remain vigilant. The Nifty faces immediate resistance at 25,550 and 25,650, while support levels are seen at 25,350 and 25,250.
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