The US Central Bank of Federal Reserve (FED) has announced a cut in interest rates. The Federal Reserve Bank has cut interest rates by 0.25 percent (25 basis points). Now the interest rate of the fed will come down at a benchmark rate of 4 to 4.25 percent. The impact of FET interest rates will be seen on the Indian stock market on Thursday. The Indian stock market may see a boom on Thursday.
So what will be the impact on Indian stock markets by the US Fed cuts in interest rates? India’s Benchmark Equity Index, Nifty 50 and BSE Sensex have increased by more than 5% so far this year, but the stock market is still below its all -time high levels in September last year.
US Fed Interest Rate Cut: Wall Street Bounce due to Interest Rate Cut
On Wednesday afternoon, the US stock markets witnessed vigilance with vigilance, when the Federal Reserve cut its benchmark interest rate by 25 basis points in accordance with the market expectations.
The Dow Jones Industrial Average saw an increase of about 450 points or 1 percent, while the S&P 500 increased by 0.1 percent. However, Nasdaq Composite declined by 0.3 percent due to a decline in technical stocks.
In his policy statement, Fed said that he remained “alert to the risks of both sides of his double mandat” and said “negative risks for employment have increased.”
Meanwhile, Bond markets reacted sharply. Treasury yields declined due to investors increasing investment in government loans to maintain existing high rates. The 10-year-old Treasury Yield again fell below 4 percent.
Will there be a stormy bounce in the Indian stock market?
Indian stock markets may open on Thursday, 18 September. Market experts say that the impact of interest rate cuts by the US central bank can be seen on Indian shares on Thursday.
Market experts believe that despite American shares being attractive, interest rate cuts will be positive for Indian stock markets.
Ankit Mandholia, head of equity and derivatives (Wealth Management) in Motilal Oswal Financial Services, says, “Low American returns reduce the relative attraction of American bonds, encouraging foreign investors to invest more in emerging markets such as India. Weak dollar helps in stabilizing the rupee, reducing import inflation and strengthening investors.
“Increased global liquidity usually increases the ability to risk risk, which benefits equity and credit markets.”
He further said, “Although the better potential of American markets may attract some domestic investment, India’s strong growth landscape and income possibilities ensure that its relative attraction remains strong. Overall, the loaf of interest rates by the Fed increases liquidity, reduces comprehensive economic challenges and supports Indian shares.”
