Thu Sep 19 12:29:45 UTC 2024: ## Indian Stock Market Hits All-Time High Following US Fed Rate Cut

**Mumbai:** The Indian stock market surged to an all-time high on Thursday morning, hours after the US Federal Reserve delivered a significant 50 basis point (bps) interest rate cut. The Nifty rose 0.68% to 25,551.65, while the Sensex gained 0.71% to 83,542.65.

The move comes after the Dow Jones initially jumped following the rate cut on Wednesday before closing 0.25% lower at 41,503.10. However, Dow Jones active futures were up almost 0.5% on Thursday morning, indicating a positive opening for the US index.

Analysts believe the rate cut, which was largely expected, will lead to profit-booking in the short term. However, they remain optimistic about the long-term implications for emerging markets like India. The cut is expected to attract greater foreign inflows, benefiting sectors like realty, autos, and non-banking financial companies (NBFCs).

So far this year, foreign institutional investors (FIIs) have invested ₹73,782 crore in Indian stocks, while domestic institutional investors (DIIs) have invested ₹3.2 trillion. The Nifty 50 index has delivered a 16% return since the start of the general elections on June 4th.

Despite the positive sentiment, some experts caution against overvaluation in the market. Sanjeev Prasad, MD & co-head of Kotak Institutional Equities, advises caution, noting that large caps are “overvalued,” small and mid caps are “highly overvalued,” and micro caps are “supervalued.” He believes only select banks offer value within the large cap space.

Market expert Ajay Bagga expects increased inflows into emerging markets following the Fed rate cut. He anticipates more FII inflows into India, which currently holds a 20% share of the MSCI Emerging Market Index flows. He also predicts that the RBI will begin rate cuts by December, potentially cutting rates by 75 bps over the next 12 months, benefiting domestic cyclical sectors like financials, real estate, and autos.

However, Aashish Sommaiyaa, CEO of WhiteOak Capital Asset Management, warns that while the 50 bps cut is positive and could lead to dollar depreciation and larger FPI flows, it could also raise concerns about the health of the American economy.

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