Stock market opens higher as Fed holds rates steady

MUMBAI: The Indian stock market opened on a strong note on Thursday, following the US Federal Reserve’s decision to keep interest rates unchanged.

The Fed also revised down its growth projections while raising inflation and unemployment estimates. Investors responded positively to these developments, leading to a surge in both the Sensex and Nifty indices.

At the opening bell, the Sensex climbed 381.49 points to 75,830.54, while the Nifty gained 118.65 points, opening at 23,026.25. Market sentiment remained positive, with 41 out of 50 Nifty companies recording gains, while only 9 saw declines.

Among the top gainers in the Nifty index were Wipro, Infosys, Bharat Electronics Limited (BEL), Hero MotoCorp, and HCL Technologies. On the other hand, HDFC Life, UltraTech Cement, JSW Steel, Sun Pharma, and Dr Reddy’s Laboratories were the biggest losers.

Ajay Bagga, banking and market expert, said, “All Central banks acted as per market expectations yesterday. The Bank of Japan hit the pause button, citing continued trade policy uncertainty as an overhang on its economy.”

He added, “Bank Indonesia refrained from further cuts in the face of the sharp falls in the Rupiah as well as the stock market as a reaction to falling consumption demand and business sentiment. The PBOC did not announce any changes to its Prime Rates this morning for key terms.”

The Brazilian Central Bank took a different approach by raising interest rates by 100 basis points, marking its third consecutive hike. The move aimed to combat rising inflation, bringing the benchmark Selic rate to 14.25%, a level last seen in 2016.

The key event, however, was the US Federal Reserve’s policy decision which held interest rates steady, lowered growth projections, raised expected inflation and unemployment figures and reduced quantitative tightening (QT) from $25 billion to $5 billion per month

Bagga stated that the US markets reacted positively to these changes, interpreting them as a dovish signal from the Fed. Wall Street rallied, bond yields declined, and the US dollar strengthened. The reduction in QT is seen as an indirect policy easing, which could improve global liquidity conditions.

Despite continued Foreign Portfolio Investor (FPI) selling, Indian markets managed to rise, signaling strong domestic resilience. The Nifty 50 is on track to cross the 23,000 mark, which could trigger a further market rally by squeezing short positions. However, concerns remain over global trade tensions, particularly with reciprocal tariffs set to take effect on April 2.

Amid global uncertainties, gold prices have been hitting new highs, as investors turn to safe-haven assets. Economic concerns, political instability, and security risks have all contributed to gold’s increasing appeal.

Bagga said, “Gold continued making new highs with economic, political and security concerns adding to its allure. Indian markets rose despite another day of FPI selling and are set to cross 23000 levels on the Nifty 50 today, which could see a squeeze of shorts and lead to a sharper uptick. The overhang remains continued FPI selling.”

He added, “The biggest overhang on markets remains the April 2nd reciprocal tariffs which could lead to widespread tariffs across the world and set off a retaliation cycle. Given that, we remain cautious on the Indian markets despite the recovery we have seen in the past few days”. (ANI)