Sensex Rises After Fed Chair Signals Possible September Rate Cut

The Indian equity markets opened positively on Monday, tracking gains in the US markets after dovish comments from Federal Reserve Chair Jerome Powell in the Jackson Hole symposium indicated there could be a rate cut in September, feeding into the optimism of investors. At 9:45 a.m., the Sensex was up 529 points, or 0.65 percent, to 81,615, and the Nifty soared 146 points, or 0.59 percent, to 24,969.

The sub-market trends were strong with Nifty Midcap up 348 pints, 0.60 percent to 58,904, and the Nifty Smallcap up 105 points or 0.55 percent to 19,184.

Sector-wise also, we can see that it remains clear that Gains were led by the Auto, IT, PSU Bank, Financial Services, Pharma, Metal, and Energy sectors. In fact, the FMCG sector was the only sector rubbing parallel to a decline in normalcy among the NSE indices.

Very few believe that Powell's unequivocal signal of a coming rate-cutting cycle will add strength to the global rally in equity markets. Observers saw the unambiguous "the time has come for policy to adjust" and his acknowledgement that "the direction of travel is clear" as a decisive move towards a dovish stance. This invited comparisons to the Greenspan put, a policy stance that supported US equity markets during Alan Greenspan's tenure as Fed chair.

Major gainers in the Sensex pack included Wipro, Tech Mahindra, TCS, HDFC Bank, Infosys, Power Grid, Axis Bank, HCL Tech, Tata Motors, and Tata Steel, while ITC, Sun Pharma, Maruti Suzuki, JSW Steel, and UltraTech Cement emerged as the top laggards.

Analysts said, "India's core inflation is just 3%, and the economic growth is showing signs of slowing." Expectation is high that Monetary Policy Committee (MPC) may take a call on rate cut of 25 bps in its next meeting.

Asian markets were mixed. Gains are seen from Bangkok to Hong Kong and Jakarta. Loss was marked by Tokyo, Shanghai, and Seoul, while in the US markets, sessions closed in positive note on Friday.

FIIs continued buying and purchased equities worth ₹1,944 crore on August 23. Domestic institutional investors too made their presence felt on August 23 and bought equities worth ₹2,896 crore even as the BSE hit a new high of 16,856.65 points.