US Federal Reserve Slashed 25 Bps, Indian Markets Closed on a High

The widely anticipated interest rate cut by the US Federal Reserve made the Indian equity markets close on a higher note on Wednesday. The meeting concluded yesterday and resulted in a rate cut. The US Federal Reserve reduced its key interest rate by 25 basis points to meet its borrowing rate of 1.75% to 2%.

The reduction in interest rates will boost the economy of emerging countries and investment activities across the world as investors can borrow at a lower cost and invest in those options that have the potential to offer high returns. The Federal Reserve has said it has no intentions to roll out further cut in the rates in the days to come. 

Sensex ended Wednesday at 36,563.88 points, which is 0.23% or 83 points higher than it’s previous close. As many as 18 of the 30 stocks in the Sensex index were in the green zone. Also, the reduction in the prices of Brent crude has made rupee soar against the US dollar, much to the relief of the market participants. 

Also Read: Indian Stocks Likely to Remain Firm, Asian Indices Soar

Monday and Tuesday were not good for the markets as both Sensex and Nifty ended on a losing note, but the trend changed yesterday. Sensex and Nifty rose with the help of gains made by the heavyweights such as ITC, State Bank of India, and Reliance Industries. Crude oil prices returning to normalcy has helped to ease the markets. 

Brent crude collapsed nearly 6% to negate the gains made in the previous days after Saudi Arabia witnessed an aerial attack on its largest oil refinery on 14 September 2019. There were speculations that Saudi would take more than a week to start production, but they have already restored 50% of the daily oil production. 

Coming to the stocks in Sensex index, Bajaj Finance, State Bank of India, Tata Steel, and Vedanta were the top gainers. Despite a significant fall in the share price of Bharti Airtel, Sun Pharma, Yes Bank, ONGC, and HDFC Bank, the BSE Sensex still managed to close on a higher note. 

On the NSE front, 33 of the 50 stocks in the Nifty index closed in the positive terrain. The NSE Nifty 50 ended the day with a slight gain of 0.21% or 23 points at 10,840.65 points.

For any clarifications/feedback on the topic, please contact the writer at vineeth.nc@cleartax.in