Indian equities are anticipated to commence trading on a positive note this Friday, September 20, 2024, following the US Federal Reserve's substantial interest rate reduction. This move has bolstered risk appetite across global markets, fueling optimism for a soft landing in the world's largest economy.
The GIFT Nifty, a derivative of the Nifty 50 index traded on the NSE International Exchange, stood at 25,523 points at 07:55 a.m. IST. This indicates that the NSE Nifty 50 is likely to open slightly above its previous close of 25,415.8 on Thursday.
Asian markets have largely responded positively to the Fed's decision, with the MSCI Asia ex-Japan index showing gains. However, Chinese markets bucked the trend, with the blue-chip CSI 300 index declining by approximately 0.3%. This downturn came after China's central bank maintained its benchmark lending rates, dampening expectations for additional policy support to revive the economy.
Wall Street experienced a robust session, with the S&P 500 reaching a new record high. The larger-than-anticipated rate cut by the Fed on Wednesday, coupled with Thursday's report of lower-than-expected weekly jobless claims, has injected confidence that the US economy might achieve a soft landing – a scenario where inflation cools without triggering a recession.
India's benchmark indexes, the NSE Nifty 50 and S&P BSE Sensex, both attained record highs on Thursday. Analysts from Emkay Global, Seshadri Sen and Arthkumar Gandhi, suggest that "Foreign inflows into India could accelerate if the Fed easing cycle triggers a risk-on rally in the US, creating enough momentum to protect domestic markets against downsides."
In corporate news, Axis Bank faces scrutiny after India's market regulator barred its investment banking unit, Axis Capital, from acting as a merchant banker for new debt issues due to alleged rule violations. The bank maintains that Axis Capital's activities in the debt segment complied with regulations and will continue operations in other areas, including equity markets.
Other notable developments include:
- IIFL Finance reports that the Reserve Bank of India has lifted restrictions on its gold loan business.
- Phoenix Mills announces its subsidiary as the highest bidder for two plots in Punjab, with a combined bid value of 8.91 billion rupees.
- NTPC receives investment approval for two super thermal power projects totaling over 209 billion rupees.
- Abbott India signs a non-exclusive patent license agreement with Japan's Takeda Pharmaceutical to market and distribute an ulcer treatment drug.
As global markets respond to the Fed's policy shift, Indian investors will be closely monitoring these developments and their potential impact on domestic equities.