Indian stock indices displayed strength on Thursday following a global surge in stocks after the US Federal Reserve upheld its forecast of three rate cuts this year during its latest monetary policy review.
Market Performance at Opening of Indian stocks
As of 10:09 am, the Sensex stood at 72,724.62 points, up 622.93 points or 0.86 percent, while the Nifty reached 22,034.05 points, marking a gain of 194.95 points or 0.89 percent. Among the Nifty 50 stocks, 47 advanced while the rest were in negative territory at the time of reporting.
US Federal Reserve’s Decision
During its March meeting, the US Federal Reserve opted to maintain the key interest rate at 5.25-5.50 percent, marking the fifth consecutive meeting without a change in policy. The Fed reaffirmed its plan for three interest rate cuts this year, expressing confidence in sustained economic growth. The Committee indicated it would hold off on rate adjustments until it has greater assurance of inflation moving steadily toward the 2 percent target.
Fed’s Commitment and Market Response
The Fed’s commitment to curbing consumer inflation to 2 percent contrasts with the current US inflation rate of over 3 percent. VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, noted that the market responded positively to the Fed’s decision, with US indices surging to new highs. He emphasized the Fed chief’s statement regarding easing inflation and a robust labor market as indicative of a soft landing for the US economy, potentially paving the way for three rate cuts this year.
Foreign Portfolio Investors’ Activity
Foreign portfolio investors have remained net buyers in the Indian market, providing further support to stocks. After turning net sellers in January 2024, they reversed course in February and March. Data from the National Securities Depository Limited (NSDL) revealed that in March alone, foreign investors purchased Indian stocks worth Rs 41,668 crore.
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