Dalal Street is expected to start the day on a positive note following the 25 basis points interest rate cut by the US Federal Reserve. This decision has boosted investor confidence worldwide. The anticipation of progress in the upcoming meeting between US President Donald Trump and Chinese President Xi Jinping is also likely to bolster market sentiment.
Federal Reserve Chairman Jerome Powell mentioned that there is a division among US central bank officials regarding future monetary policy directions. Powell also warned that financial markets should not presume another rate cut later this year, emphasizing that future actions will be based on economic data and prevailing conditions.
Early indications show that Gift Nifty futures were trading at 26,188 points at 7:45 am, hinting that the Nifty 50 may open higher than Wednesday’s closing level of 26,053.9.
Both the Sensex and Nifty indices rose nearly 0.5% each in the previous session and are currently trading less than 1% below their all-time peaks recorded in September 2024.
Asian markets experienced a slight uptick on Thursday morning following the US Fed’s rate cut announcement. While investors widely anticipated the central bank’s decision to reduce rates by a quarter of a percentage point, the statement from Fed Chair Jerome Powell suggesting that this might be the final cut for 2025 has tempered expectations for a December cut.
A decrease in US interest rates typically makes emerging markets like India more appealing to foreign investors due to the potential for increased capital inflows seeking higher returns.
Market participants are monitoring the Trump-Xi meeting scheduled for later in the day, with expectations that a trade deal between the two largest economies could be finalized. Such an agreement could drive up demand for commodities such as metals and crude oil, further boosting market sentiment in Asia.
Vishal Goenka, Co-Founder of IndiaBonds.com, noted that the US Fed’s decision to cut benchmark overnight rates by 25 bps was in line with expectations. However, Powell’s indication that further cuts in the upcoming December meeting are not guaranteed presents an opportunity for the RBI to cut the repo rate in its next early December meeting.
Foreign portfolio investors were net sellers of Indian equities on Wednesday, with outflows totaling Rs 25.4 billion, while domestic institutional investors were net buyers, acquiring shares worth Rs 56.93 billion.
Larsen & Toubro’s stock is anticipated to attract attention after the company reported robust second-quarter results and a better-than-expected annual order outlook.
With positive global cues post the Fed’s decision and optimism surrounding trade negotiations, Indian markets are poised for a strong opening today. However, investors may proceed with caution until there is more clarity on future rate cuts and global economic trends.