 |
|
The Indian stock market experienced a significant surge on September 12, with both the Sensex and Nifty reaching record highs. The rally, driven by optimism surrounding a potential US Fed rate cut, added over Rs 6.5 lakh crore to BSE's market capitalization. The total market capitalization of all BSE-listed companies climbed to a new high of Rs 467.22 lakh crore, reflecting a 1.4% increase from the previous day's close.
The benchmark Sensex gained 1.77%, or 1,440 points, closing at 82,962, while the BSE Mid and Smallcap indices also registered gains of 1.32% and 0.8%, respectively. This bullish sentiment can be attributed to investors' anticipation of a US Fed rate cut, which is expected to be announced at the FOMC meeting scheduled for September 18.
Independent analyst Ajay Bagga believes that the certainty surrounding a US Fed rate cut has encouraged foreign funds to shift their focus towards emerging markets like India. He suggests that after a cautious start to September, investors are now increasing their allocations to emerging markets, fueled by strong domestic inflows. This shift, coupled with the anticipation of a rate cut, is likely contributing to the momentum in India's equity market.
While the US CPI data might not be compelling enough for an aggressive Fed rate cut, analysts like Prashant Tapse from Mehta Equities note that recent economic indicators suggest that the US could face growth challenges in the future. This suggests a potential for the Fed to cut benchmark rates to address these challenges. Despite concerns about stretched valuations, retail investors continue to pour money into the market, reflecting their optimism about India's economic resilience in a slowing global economy.
The positive sentiment in the Indian stock market is not isolated, as global markets have also witnessed a rally despite a slightly higher-than-expected US inflation report. Some US traders anticipate Fed rate cuts of approximately 100 basis points by the end of 2024, with the next rate decision expected to be announced at the meeting scheduled for September 17-18. This optimistic outlook, driven by the potential for rate cuts, is further bolstering the positive sentiment in the global financial markets.
Source: Rally boosts BSE's market capitalisation by Rs 6.5 lakh crore, Sensex hits record high