US Fed rate cut lifts Indian stocks above 84,000 on BSE Sensex- Firstpost

Indian stocks surged to record highs on Friday as a significant interest rate cut by the US Federal Reserve and expectations of a soft landing for the world’s largest economy boosted risk appetite.

The NSE Nifty 50 and S&P BSE Sensex indices were up around 1.1 per cent each by 11:10 am India time, with the Sensex crossing the 84,000-point mark for the first time in its history.

A 50 basis point cut in U.S. interest rates on Wednesday and data showing lower-than-expected weekly jobless claims on Thursday have fueled optimism about the possibility of a soft landing for the U.S. economy, a scenario in which inflation falls but does not trigger a recession.

“The Federal Reserve’s easing of interest rates and positive economic data could have a positive impact on Indian markets, boosting capital inflows and boosting stock performance on the back of excess liquidity,” said Anil Rego, founder and fund manager at Right Horizons Portfolio Management Services.

Twelve of the 13 major sectors rose. Metals led sector gains with a 1.75% gain, with all 15 of its components in the green.

The outlook for metals demand improved on a Federal Reserve interest rate cut and expectations of stimulus from China, the largest consumer.

JSW Steel shares rose 4% after Macquarie raised its recommendation for the stock from “buy” to “outperform.”

The brokerage also raised target prices on shares of Jindal Steel and Power, Tata Steel, Hindalco and Coal India.

Macquarie, which currently has an outperform rating on all five metals stocks in its portfolio, said the global easing cycle would be disinflationary and support commodity markets through 2025, while also supporting steelmaker earnings.

The automotive sector index rose by 1.4 percent, and the financial sector by 1 percent.

Small and medium-sized companies with a broader, more national profile rose 0.8% each.

Among individual stocks, shares of non-bank IIFL Finance rose 13 per cent after the Reserve Bank of India lifted restrictions on its lending against gold.

Mankind Pharma shares rose 7% to a record high after Investec launched a buy rating on the stock, forecasting a 37.7% rise over the 12 months.