Understanding the Impact of US Fed's Paused Rate Hike on Sensex and Nifty
Key Highlights :
The two key equity benchmarks, Sensex and Nifty, on Friday, opened with gains following strong global cues as investors sidestep global rate hike fears. This after the US Fed’s paused rate hike on Wednesday. Although they have forecasted that rate hikes may resume later. At 9.30 am, the BSE Sensex rose 215 points to 63,133. On the other hand, the NSE Nifty50 jumped 64 points to 18,752.
The US Federal Reserve’s decision to pause its rate hike campaign had an immediate impact on the Indian equity markets. The BSE Sensex and NSE Nifty opened with gains on Friday, as investors were relieved that the US Fed had decided to pause its rate hike and that rate hikes may resume later. The Sensex rose 215 points to 63,133 and the Nifty50 jumped 64 points to 18,752.
The 30-share Sensex platform saw UltraTech Cement, Reliance, Nestle India, ICICI Bank, Titan, and SBI as the early gainers. On the flip side, TCS, PowerGrid, Wipro, Bharti Airtel, L&T, and Maruti Suzuki emerged as losers. Hindalco, JSW Steel, and Dr Reddy’s were the top gainers on Nifty. On the flip side, Bharti Airtel, TCS, PowerGrid, Wipro, Hero Moto, and Bajaj Auto were among the losers.
The broader markets outperformed benchmarks. The BSE MidCap and SmallCap indices rose up to 0.8 per cent. Sectorwise, Nifty Metals, Nifty Realty, and Nifty Bank were leading the pack, rising 0.5-1 per cent.
In the previous session on Thursday, the BSE Sensex slipped into the negative zone and closed at 62,918, down 311 points. On the other hand, the NSE Nifty dipped to a low of 18,669 and eventually ended 68 points lower at 18,688.
Meanwhile, in other Asian Markets, on Friday Tokyo shares opened lower as against the rallies on Wall Street, with traders looking at the Bank of Japan’s policy announcement expected later in the day. On Wall Street, the S&P 500 and Nasdaq rose on Thursday to close at their highest in 14 months. Investors cheered economic data hoping that the US Federal Reserve is nearing the end of its interest-rate hike campaign.
In early trade, oil prices edged lower on Friday. Brent futures dipped 13 cents to $75.54 a barrel, while the US West Texas Intermediate (WTI) crude dropped 10 cents to $70.52 a barrel. Meanwhile, the Rupee opened at 81.98 against the dollar as against the previous close of 82.21. On Thursday, the Rupee fell 20 paise to close at 82.25 against the US dollar on Thursday, pulled down by a strong greenback overseas and a negative trend in domestic equities.
Foreign Institutional Investors (FIIs) bought equities worth Rs 3,086 crore on Thursday, as per exchange data. On the other hand, Domestic Institutional Investors (DIIs) sold Rs 298 crore of shares.
The US Fed’s decision to pause its rate hike campaign has had a positive impact on the Indian equity markets. The Sensex and Nifty opened with gains on Friday, as investors were relieved that the US Fed had decided to pause its rate hike and that rate hikes may resume later. The BSE MidCap and SmallCap indices rose up to 0.8 per cent, while Nifty Metals, Nifty Realty, and Nifty Bank led the pack, rising 0.5-1 per cent. The Rupee also opened at 81.98 against the dollar as against the previous close of 82.21.
However, it is important to note that the US Fed has only paused its rate hike and not reversed its decision. The US Fed has forecasted that rate hikes may resume later and investors should keep a close eye on the developments in the US economy.
