Benchmark indices – Sensex and Nifty 50 –witnessed a strong rally on Friday, September 20, 2024 on the back of a 50 bps rate cut by the Federal Reserve on September 18.

The Sensex rallied 1.27 per cent or 1,063.89 points, hitting a fresh record high of 84,248.69 levels. The Nifty 50 also saw a robust gain of 1.21 per cent, or 309.8 points, hitting a new all-time high of 25,726.65.

On the BSE, top gainers included M&M, JSW Steel, Maruti Suzuki and L&T, while Nestle and Axis Bank, NTPC and TCS were the only losers.

key contributors to the Sensex included ICICI Bank, Reliance Industries and HDFC Bank

Broader markets were also shining, with the NSE MidCap index climbing 0.94 per cent and the SmallCap index rising 1.14 per cent.

Asian markets continued their upward trend on Friday, fueled by a major interest rate cut in by the US Fed. The Nikkei rose 1.68 per cent, while the ASX 200 increased 0.05 per cent, and the Hang Seng climbed 0.88 per cent.

Japan’s core consumer prices also contributed to the positive sentiment, with a year-on-year increase of 2.8 per cent in August, matching Reuters estimates and up from 2.7 per cent in the previous month.

In the US, the S&P 500 reached a record high on Thursday, supported by the Fed's rate cut and expectations of more cuts to follow. The Dow Jones Industrial Average also set a milestone, closing above 42,000 for the first time, with a gain of 1.26 per cent. The Nasdaq and S&P 500 surged 2.51 per cent and 1.70 per cent, respectively.

Additionally, US unemployment claims dropped to their lowest level in four months at 219,000 for the week ending September 14, surpassing economists' expectations of 230,000. The four-week average claims fell to 227,500.

That apart, the Bank of England decided to keep its interest rate at 5 per cent, diverging from the Fed's more aggressive cuts.

The Bank of Japan held its benchmark interest rate steady at around 0.25 per cent, the highest rate since 2008, following a two-day meeting. It also maintained its view the economy remained on track for a moderate recovery.

Similarly, China opted to maintain its key lending rates, with the one-year loan prime rate at 3.35 per cent and the five-year LPR at 3.85 per cent.

The metal index was one of the top performers, climbing 1.99 per cent to an intraday high of 9,435.60. This surge was driven by strong performances from JSW Steel, which reached a fresh 52-week high after upgrades from Macquarie and Goldman Sachs. Tata Steel also benefited from similar reasons, leading to a broad uptick in steel stocks.

Global brokerages like Goldman Sachs and Macquarie expressed optimism about metal stocks, citing signs of recovery in the Chinese economy, particularly after the country maintained its key lending rates.

Macquarie has upgraded its rating on JSW Steel to Outperform, raising the target price from Rs 884 to Rs 1,077. For JSPL, it maintained an Outperform rating while increasing the target price from Rs 1,070 to Rs 1,170. Tata Steel also saw its target price lifted from Rs 162 to Rs 171, while Morgan Stanley retained an Underweight rating on Tata Steel with a target price of Rs 135. In its assessment of JSPL, Morgan Stanley maintained an Equal Weight rating and raised the target price to Rs 970. Similarly, JSW Steel was also kept at Equal Weight, with the target price increased to Rs 895.

Rate-sensitive sectors, including banks, real estate, and autos, were active in trading. The Nifty Bank index surged by 0.98 per cent, reaching a record high of 53,559.35. The Nifty Auto index was the second top gainer, rising by 1.73 per cent in intraday trading.

According to S&P Global, India is projected to become the world’s third-largest economy by 2030-31, with an expected annual growth rate of 6.7 per cent. India has emerged as the fastest-growing large economy, with GDP growth estimated at 8.2 per cent for the financial year 2024, surpassing earlier government estimates of 7.3 per cent.

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