US Federal Reserve's rate pause augurs well for inflow of foreign funds

At current interest rates, the earnings yield for a portfolio that mirrors the broad-based BSE 500 index exceeds the US treasury yield by 48 basis points, which is the highest in a year

The latest move by the US Federal Reserve to keep its policy interest rates unchanged is likely to provide further leg-up to the rally at Dalal Street.

The US central bank’s decision indicates it is not in a hurry to raise rates in the near-to-mid-term, which translates into a higher spread on earnings yield for foreign investors buying Indian equities.

After the Fed’s announcement, the yield on the 10-year US government bond moved lower and settled at 2.51 per cent, against 2.54 per cent a day before.

At current interest rates, the earnings yield for a portfolio that mirrors the broad-based BSE 500