The Federal Reserve, in its third meeting, decided to keep interest rates steady and signaled a series of cuts for the next year. This decision comes after a period of aggressive rate hikes.
Experts believe that the dovish message from the Fed will lead to a rally in the coming days. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, stated that the tightening cycle is over and expects three rate cuts in 2024.
In Asian markets, stocks rallied following the Fed’s dovish tone. Mainland Chinese bluechips and Hong Kong’s benchmark advanced, while Japan’s Nikkei slid due to the rally of the yen.
In the US, the Dow closed at a record high above 37,000 points. The S&P 500 and Nasdaq composite also rose. The US dollar index fell, leading to an inflow of Foreign Institutional Investment (FII) in India.
Benchmark Treasury yields reached their lowest level since August 10, with the 10-year Treasury yield slipping below the psychological 4% mark. Vijayakumar stated that this decline will lead to large capital flows to India, benefiting large caps in banking and the IT sector.
Oil prices rose on expectations of lower borrowing costs in 2024. Brent futures settled at $74.49 a barrel, while US West Texas Intermediate (WTI) crude settled at $69.58 a barrel.
Foreign institutional investors (FIIs) continued to be net buyers, purchasing Indian shares worth Rs 4,710.8 crore on Wednesday. Domestic institutional investors (DIIs), on the other hand, sold shares worth Rs 958 crore. In December, FIIs have bought shares worth Rs 33,959 crore.
