According to V.K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services, the recent dovish stance from the US Federal Reserve has paved the way for an anticipated Santa Claus rally in the days ahead. In fact, Vijayakumar suggests that this could potentially spur a pre-election rally, propelling the markets to new highs.
The key takeaway from the Federal Reserve's message delivered on Wednesday is that the era of tightening is concluded, and there's a possibility of three rate cuts in 2024, despite market expectations for four. This sentiment is expected to translate into a surge, with the Dow's record-breaking rally influencing various indices to attain new highs, as per Vijayakumar.
A noteworthy development is the decline in the US 10-year yield to 4 percent, which is anticipated to trigger substantial capital inflows to India. Large-cap stocks, particularly those in the banking sector with reasonable valuations, are expected to be primary beneficiaries, with IT stocks also drawing increased investor interest.
While the enthusiasm among retail investors could uplift mid and small-cap stocks, Vijayakumar cautions that these segments lack valuation comfort. Nevertheless, propelled by the optimistic message from the US Fed, the BSE Sensex witnessed an impressive surge of 847 points, reaching 70,431 points on Thursday. Notably, IT stocks, led by Infosys and HCL Tech, are at the forefront of this rally, each recording gains of over 3 percent.
(With Agency Inputs)
Read also| Sensex Surges Beyond Record-Breaking 70,000 Mark During Morning Trade
Read also| Sensex Witnesses Over 200-Point Drop as IT Heavyweights Lag Behind: Market Update
