Sensex Up 750 Points, Rs 5 Lakh Cr in Investor Wealth; What’s Driving Today’s Market Upswing?
The domestic benchmarks Nifty 50 and Sensex began higher on March 21, with the NSE index regaining the 22,000 mark. This was due to the Federal Reserve’s prediction of three rate cuts this year, which was supported by strong global signals.
The Nifty increased 1% and the Sensex surged over 750 points on Thursday as buying was seen in all market sectors.
The sector indexes Nifty Auto, Bank Nifty, and Nifty IT—all of which are very susceptible to changes in interest rates—were up more than 1% at the time of trade.
Why is the market growing right now?
Fed Judgment
Fed Chair Jerome Powell reaffirmed the central bank’s previous prediction of a gentle landing for the biggest economy in the world and said that recent high inflation readings had not altered the fundamental narrative of gradually lowering pricing pressures.
The CME’s FedWatch Tool indicates that the likelihood of a rate decrease in June increased to 77% from 59% a day earlier as a result of the remarks.
Sticky inflation figures, according to Fed Chair Jerome Powell, indicate pricing pressures but “haven’t really changed the overall story, which is that of inflation moving down gradually.”
US Treasury yields declining
In New York trading, US Treasury rates marginally decreased while remaining stable in Asia. The most recent two-year yield was 4.59%, while the 10-year yield was 4.26%.
Purchasing at reduced prices
Following the over-3% correction that occurred last week, investors reacted by purchasing at reduced prices. On March 11, the Nifty hit a 52-week high of 22,526 after closing the previous day at 21,839.
International Markets Appreciate
The Federal Reserve’s decision to maintain the benchmark lending rate at 5.25–5.5% was well-received by the world’s equities markets. Furthermore, the Fed said that it would lower interest rates three times in the current year.
The three main Wall Street indexes closed at all-time highs. The Nasdaq Composite increased 1.25 percent, the S&P 500 leaped 0.89 percent, and the Dow Jones gained 1.03 percent.
In early trading, Japan’s Nikkei gained 1.5% to reach a new high of over 40,000. The Asia-Pacific equities MSCI’s broadest index outside of Japan increased 1.6%.
Quick Technicals
On March 20, the Nifty entered a consolidation movement amidst turbulence and ended the day up 21 points. Later on in the day, it changed into an erratic swing action that went up and down, and it ended with a little gain.
“The Nifty’s short-term trend is still negative. In the next sessions, a further up-move from here may encounter significant overhead resistance around the 22,150–22,200 levels; this is probably a sell-on-rise chance. According to HDFC Securities senior technical research analyst Nagaraj Shetti, “immediate support is at 21,700.”
