Sensex, Nifty Set To Rally As Fed Sees Three Rate Cuts In 2024

(RTTNews) - Indian shares may see strong gains on Thursday after the U.S. Federal Reserve flagged the end of its tightening cycle and struck a dovish tone for the year ahead.

Benchmark indexes Sensex and Nifty ended little changed on Wednesday while the rupee settled at a record closing low of 83.4 against the dollar.

Foreign institutional investors (FII) bought shares worth net Rs 4710.86 crore on Wednesday, while domestic institutional investors sold shares worth net Rs 958.49 crore, according to provisional data available on the NSE.

Asian stocks followed Wall Street higher on the Fed's dovish stance. The dollar dropped to a four-month low and the benchmark Treasury bond yield fell below the 4 percent level for the first time in four months on the Fed's pivot to rate cuts.

Gold extended gains after climbing more than 1 percent in the U.S. trading session overnight.

Oil extended gains from the previous session amid Middle East tensions and data showing a bigger-than-expected weekly withdrawal from U.S. crude storage.

Concerns mounted about the security of Middle East supplies after a tanker attack in the Red Sea off Yemen's coast.

Israel said the war against Hamas will continue with or without international support.

U.S. stocks closed higher overnight while benchmark slipped to their lowest level since August as the Fed signaled an end to its tightening cycle and confirmed plans to pivot to cutting rates next year, citing slowing inflation and economic growth.

The median forecast indicate rates will be lowered to 4.6 percent by the end of 2024, suggesting the Fed plans to cut rates by 25 basis points three times next year.

During his post-meeting press conference, Fed Chair Jerome Powell acknowledged that rate cuts will be a "topic of discussion" at upcoming meetings.

The Dow spiked 1.4 percent to a record closing high, while the Nasdaq Composite and the S&P 500 also gained about 1.4 percent to reach their best closing levels in almost two years.

European stocks ended mixed on Wednesday as investors digested muted U.S. producer price inflation and Eurozone industrial production data, and looked ahead to the FOMC policy decision.

The pan European STOXX 600 finished marginally lower. The German DAX and France's CAC 40 both slipped around 0.2 percent while the U.K.'s FTSE 100 ended flat with a positive bias.