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The Indian stock market experienced a surge in late afternoon trading on September 17, with the Sensex and Nifty indices climbing higher following a volatile start. This upward trend was primarily driven by strong performance in the telecom, banking, and construction sectors, while metal stocks witnessed a dip. By 2:30 PM, the Sensex had risen 137 points, or 0.2 percent, to 83,126, while the Nifty gained 48 points to reach 25,431. This positive market movement was accompanied by increased trading activity, with 1,443 shares advancing, 1,985 shares declining, and 74 shares remaining unchanged.
The optimistic sentiment in the Indian market was largely attributed to the anticipation of potential interest rate cuts following the Federal Open Market Committee (FOMC) meeting scheduled for September 17-18. Centrum Broking highlighted this optimistic outlook, stating that the Indian market is hopeful about the possibility of a rate cut following the FOMC meeting. ICICI Securities echoed this sentiment, suggesting that with the prospect of rate cuts in the US, Foreign Institutional Investor (FII) money is expected to return to emerging markets, with India poised to benefit significantly. This inflow of foreign capital is anticipated to contribute to an already robust domestic liquidity environment.
Sector-wise, the gains were led by Nifty Private Bank, Energy, Infrastructure, and Realty, which rose between 0.2 and 0.4 percent. In contrast, Nifty Metal cooled off after a three-day rally. The strength displayed by banking stocks, particularly in the Nifty Bank and Nifty Private Bank indices, has been a prominent feature over the past four sessions, with signs of accumulation in these attractively valued segments. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, attributed this trend to the recent strength of banking stocks and observed signs of accumulation in these attractively valued segments.
The Nifty 50 index also saw notable gains, with M&M, NTPC, Bharti Airtel, Bajaj Auto, and Hero MotoCorp among the top performers. Conversely, Asian Paints, Eicher Motors, Adani Ports, HDFC Life, and Tata Motors lagged behind. However, in broader markets, the BSE Midcap and Smallcap indices remained flat, underperforming the benchmark indices. Investors are closely monitoring the upcoming US retail sales data, which will provide insights into consumer health ahead of the Fed meeting, along with India’s wholesale price data for August.
The outcome of the September 17-18 FOMC meeting remains a key focus for investors. Gaurang Shah, Senior Vice President at Geojit Financial Services, indicated that a 25 basis point cut is already priced into the markets. He suggested that if the Fed goes for a 50 basis point cut, the US markets could experience euphoria, spilling over into global markets, including India. This scenario could potentially push the Nifty 50 index towards the 25,600 mark. However, Vijayakumar cautioned that while rate cuts generally have a positive impact on markets, a 50 basis point cut amidst signs of a sharply slowing economy could be perceived differently by the market. The market might interpret it as a signal of the US economy entering a recession, which could lead to a less-than-positive response.
Overall, the Indian stock market demonstrated bullish momentum on September 17, fueled by optimism surrounding potential US interest rate cuts and strong performance in key sectors. However, investors are aware of the complexities surrounding the Fed's decisions and the potential implications for global markets. The upcoming FOMC meeting and related economic data will undoubtedly shape market sentiment in the coming days.
Source: Sensex up 110 points, Nifty surpasses 25,400; telecom, banking stocks lift markets