 "Record Galore! Why has Sensex rallied 1,360 points today; details here")
Sensex, Nifty fly high: 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 1,509.6 points intraday, hitting a fresh record high of 84,694.5 levels. The Nifty 50 also saw a robust gain of 433 points, hitting a new all-time high of 25,849.
By close, the BSE Sensex stood with gains of as much as 1,359.51 points or 1.63 per cent at 84,544.31. Similarly, the Nifty50 ended Friday's session with a gain of 375.15 points or 1.48 per cent at 25,790.95.
Twenty eight of 30 Sensex stocks settled in the positive territory on Friday, led by M&M, ICICI Bank, JSW Steel, L&T, Bharti Airtel, Nestle India, Adani Ports, HUL, and Kotak Bank.
In the broader markets, the Nifty MidCap index advanced by 1.4 per cent, while the Nifty SmallCap added 0.98 per cent.
Among sectors, the Nifty Realty index climbed 3 per cent, followed by gains in the Nifty Auto, Metal, and Bank indices.
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That said, here are the key reasons why Sensex surged nearly 1,100 points today:
Rally in global markets
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.
BoJ, China hold interest rates steady
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.
Metals shine
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.
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 on the rise
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.
S&P Global says India to be the third largest eco in the world
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.
Technical
On the upside, 25,550 and 25,650 serve as immediate resistance levels, and a break above these could push the markets towards the 25,800-26,000 range, said Hardik Matalia, derivative analyst at Choice Broking. Traders holding long positions are advised to maintain them, with a trailing stop loss set at 25,200 on a closing basis.
On the downside, immediate support for the Nifty is observed at 25,350, followed by 25,250, he added.