Indian shares register marginal rise with focus now on US Fed action
Sep 17, 2024
New Delhi [India], September 17 : Stock indices in India closed Tuesday's trading marginally up after having touched fresh highs during the session, but remained largely muted ahead of the crucial US Federal Reserve monetary policy meeting.
Sensex closed at 83,079.66 points, up 90.88 points or 0.11 per cent, while Nifty closed at 25,418.55 points, up 34.80 points or 0.14 per cent. Among the sectoral indices, realty and consumer durables were among the top movers.
"The Indian market exhibited a subtle positive momentum, driven by the anticipation of a rate cut cycle by the US FED. Although a 25-bps cut is largely factored in, the market remains attuned to the FED's comments on the health of the economy and the future trajectory of rate cuts," said Vinod Nair, Head of Research, Geojit Financial Services.
"Further, robust institutional flows continued to bolster the domestic market. While the overall trend remained positive, there was notable buying interest in large-cap stocks, particularly in sectors such as IT, FMCG, and private banks," Nair added.
Domestic stock indices had been rising substantially of late, possibly due to inherent strength in domestic market fundamentals.
Continued buying by foreign portfolio investors (FPIs) also somewhat supported the stock indices. Foreign portfolio investors seemed to have upped their investments in India, hoping for a better return on investments amid high chances of interest rate cuts in the US.
They have so far mopped up Rs 27,856 worth of stocks in India in September, data made available by NSDL showed. They have been net buyers for the fourth month now.
Investors across financial markets, including in India, will look for fresh cues from the outcomes of the upcoming US monetary policy review meeting later this week, particularly the extent of interest rate cut, if any.
The US Fed's monetary policy meeting takes place September 17-18.
US Federal Reserve Chair Jerome Powell recently indicated that it was time for the US central bank to reduce interest rates as inflation rates aligned with its target. Addressing the much-awaited Jackson Hole Symposium last month, Powell said that "the time has come for policy to adjust" but stopped short of hinting at the quantum of interest rate cut.
It is most likely that the US central bank will loosen its monetary policy, but investors are monitoring the extent of the cut - shallow or deep.
Faced with high inflation during the COVID-19 pandemic, the US monetary policy committee, as part of its commitment to restoring price stability, raised the policy rate by 425 basis points in 2022 and another 100 basis points in 2023. It held the policy rate at its current restrictive level since July 2023.
Domestically, market participants also closely monitored inflation data. It remained at comfortable levels in August.
