Sensex Up 750 Points, Investor Wealth Swells by Rs 5 Lakh Cr; Why Market is Rising Today

Domestic benchmarks Nifty 50 and Sensex opened in the green on March 21, with the NSE index reclaiming the 22,000 level, tracking strong global cues as the Federal Reserve gave the projection of three rate cuts this year.

Sensex rallied over 750 points and Nifty jumped 1 per cent on Thursday as buying was seen across all sectors.

Nifty Auto, Bank Nifty and Nifty IT – three sectoral indices that are highly sensitive to interest rate decisions – were trading higher by over a per cent each.

Why Market is Rising Today?

Fed Decision

Fed Chair Jerome Powell said that recent hot inflation readings had not changed the underlying story of slowly easing price pressures and reiterated the central bank’s earlier forecast of soft landing for the world’s largest economy.

The comments aided expectations of a rate cut in June, the odds of which rose to 77 per cent from 59 per cent a day ago, according to the CME’s FedWatch Tool.

Fed Chair Jerome Powell told reporters sticky inflation reports show price pressures but “haven’t really changed the overall story, which is that of inflation moving down gradually”.

Decline in US treasury yields

US Treasury yields fell slightly in New York trade and were steady in Asia. Two-year yields were last at 4.59 per cent and 10-year yields at 4.26 per cent.

Buying at lower levels

After experiencing a correction of nearly 3 per cent last week, investors responded by engaging in buying activity at lower levels. The Nifty reached a 52-week high of 22,526 on March 11, with the Nifty level standing at 21,839 the previous day.

Global Markets Cheer

The global equity markets cheered the Federal Reserve’s decision to keep the key lending rate unchanged at 5.25 – 5.5 per cent. Additionally, the Fed indicated it will cut the interest rate three times during the current calendar year.

Wall Street’s three major indices hit record closing highs. Dow Jones gained 1.03 percent, S&P 500 jumped 0.89 per cent and the Nasdaq Composite surged 1.25 per cent.

Japan’s Nikkei went up 1.5 per cent to a fresh peak over 40,000 in early trade. MSCI’s broadest index of Asia-Pacific shares outside Japan jumped 1.6 per cent.

Nifty Technicals

The Nifty shifted into a consolidation movement amid volatility on March 20 and closed the day higher by 21 points. It later shifted into a volatile up and down swing movement for the day and finally closed with minor gains.

“The near-term trend in the Nifty remains weak. Further up-move from here could find strong overhead resistance around 22,150-22,200 levels in the next few sessions and this is likely to be a sell-on-rise opportunity. Immediate support is at 21,700,” said Nagaraj Shetti, senior technical research analyst at HDFC Securities.