Fed Cuts Rates, Indian Markets Soar! | Weekly Update September 20th

Hello Readers! 

The decision is out! The Fed reserve has officially lowered interest rates and things seem to be looking even better for the Indian stock market, that has been hitting record highs repeatedly. But what does it all mean for you? Let’s take a look after we look at the highs and lows of the past week in the markets.   

🧾In this Article 

Weekly Market Wrap-up 

Quick bites 

Stocks in News 

IPO corner 

Cover story: Fed Cuts Rates, Indian Markets Soar!  

Key events 

📈 Weekly Market Wrap-up 

The Indian stock market had a strong week, with both the BSE Sensex and Nifty 50 indices closing higher. The Sensex gained 1.9%, ending the week at 84,544.31. Meanwhile, the Nifty 50 rose 1.6%, reaching 25,790.95. The Nifty Midcap 100 index rose 1.0%, closing at 60,208.80. Meanwhile, the Nifty Smallcap 50 and Nifty Smallcap 100 indices saw a decline of 0.1% and 0.1%, respectively. 

Sector Spotlight 

Tech stocks took a hit, with the IT index falling 2.83%. On the other hand, consumer goods, capital goods, and consumer durables all saw gains, with increases of 1.06%, 0.99%, and 1.64%, respectively. However, the healthcare sector struggled, with a decline of 0.39%. 

Nifty 100 Top gainers  

• Mahindra & Mahindra Ltd. = 2,950.85 (▲7.7%) 

• ICICI Bank Ltd. = 1,338.45 (▲6.9%) 

• Nestle India Ltd. = 2,699.55 (▲6.8%) 

• Larsen & Toubro Ltd. = 3,793.90 (▲4.7%) 

• NTPC Ltd. = 423.95 (▲4.5%) 

Nifty 100 Top losers 

• Tata Consultancy Services Ltd. = 4,284.90 (▼5.2%) 

• Bharat Petroleum Corporation Ltd. = 331.20 (▼3.8%) 

• Grasim Industries Ltd. = 2,678.25 (▼2.9%) 

• Oil & Natural Gas Corporation Ltd. = 286.25 (▼2.7%) 

• HCL Technologies Ltd. = 1,760.05 (▼2.6%) 

FII and DII Activity: 

Flls were net buyers, adding a total of 15,199.60 crores to the market. This positive inflow from Flls was primarily driven by optimism about India’s economic growth prospects and favorable government policies. On the other hand, Dils were also net buyers, contributing 2444.19 crores to the market. This indicates a strong beliet in the Indian equity market among domestic investors as well. Overall, the combined net buying by Flls and Dils provided a positive boost to the Indian stock market during the week. 

Global Gossip 

The Dow Jones Industrial Average (DOW) declined by 169.30 points or 0.41%, closing at 41393.78. The Nasdaq Composite (NASDAQ) experienced a similar drop, falling by 29.64 points or 0.17% to 17683.98. The S&P 500 (S&P) also declined by 22.38 points or 0.40%, finishing the week at 5626.02. In Europe, the FTSE 100 (FTSE) decreased by 103.54 points or 1.24% to 8273.09, while the DAX (DAX) fell by 207.52 points or 1.10% to 18699.40. The CAC 40 (CAC) experienced the largest decline, dropping by 165.70 points or 2.17% to 7465.25. 

In Asia, the Nikkei 225 (NIKKIE) rose by 190.29 points or 0.52% to 36581.76, while the Hang Seng Index (HANGSENG) declined by 75.21 points or 0.43% to 17369.09. The Shanghai Composite (SHANGHAI) also fell by 61.72 points or 2.23% to 2704.09. 

Rupee Report 

The Indian rupee experienced a slight depreciation against the US dollar during the week. The rupee closed at 83.9175 on September 14, 2024, down from the previous close of 83.96. This represents a decline of 0.0425 points or 0.05%. 

Gold Surges 

Gold prices increased by 0.78% to $2,578.48. This rise was likely driven by a combination of factors, including geopolitical tensions, inflation concerns, and a weaker US dollar. The daily range for gold prices during the week was between $2,556.84 and $2,585.78. The 52-week range for gold prices was between $1,811.03 and $2,586.00. Over the past week, gold prices have increased by 2.40%. 

🍟 Quick Bites 

🚀 The government has approved the development of India’s first space station “Bharatiya Antariksh Station (BAS-1)” by 2028.  

🌌 The government has also approved the Venus Orbiter Mission and Chandrayaan-4 Mission.  

💰 The government has reduced the windfall tax on crude oil to ₹0 from the previous rate of ₹1,875 per tonne effective from 18 September.  

📈 India’s trade deficit (net imports) increased by 22.50% year-on-year to a 10-month high of ₹29.65 billion in August.  

📉 Exports fell 9.3% to ₹34.71 billion, while imports rose 3.3% to ₹64.36 billion.  

📊 India’s annual wholesale price inflation was 1.31% in August (down from 2.04% in July).  

⛽ Fuel & power inflation was negative in August at -0.67%.  

🏭 Manufacturing inflation was 1.22% and food inflation was 3.26%.  

✈️ Air India will invest $400 million to upgrade 67 of its old airplanes.  

🛩️ This includes 27 narrow-body Airbus planes and 40 wide-body Boeing planes.  

🛠️ The company has begun the process with one of its Airbus A320 Neo planes.  

📦 Swiggy has launched “Project Next” for upskilling their delivery partners.  

👥 The initiative will train and recruit delivery partners for higher roles in the company, such as onboarding and managing more restaurants on the platform.  

🚄 PM Modi launched the first Vande Metro rail between Ahmedabad and Bhuj.  

🚆 The metro train has been renamed “Namo Bharat Rapid Rail” and will cover 360 km in 5 hours 45 minutes.  

🏆 HCL Tech emerged as the top Indian company in TIME’s World’s Best Companies 2024 list, with a global rank of 112.  

🔝 It was followed by Infosys (119) and Wipro (134).  

🌍 Globally, Apple topped the list, followed by Accenture, Microsoft, BMW Group, and Amazon.  

🏢 BMW launched a new dealership “Retail.NEXT” in India, starting from Gurugram.  

🛒 These new dealerships will sell 3 brands – BMW, MINI, and BMW Motorrad under a single roof.  

💵 The company will invest ₹365.60 crores across the country in 33 cities over 3 years. 

🔎 Stocks in news 

💊 Aurobindo Pharma will fully acquire GLS Pharma for ₹22.5 crore.  

🏦 SBI raised ₹7,500 crore through a bond issue with a 7.33% coupon rate and a 15-year tenure.  

🍔 TCS signed a deal with McDonald’s Philippines for a technology upgrade.  

⚛️ NTPC will form a joint venture named ‘ASHVINI’ with NPCIL to build nuclear power plants.  

📜 REC signed non-binding MoUs worth ₹1.12 lakh crore at the ‘4th Re-Invest 2024’.  

💵 Zydus Lifesciences will acquire Sterling Biotech’s API business for $840 million.  

🏍️ Bajaj Auto launched 2 new 400cc motorbike models in India.  

🤝 LIC partnered with Infosys to develop its end-to-end digital infra.  

💰 JBM Ecolife Mobility got $100 million funding from ADB and AIIB.  

🔥 Adani Power will supply 1.49 GW of thermal power from a new ultra-supercritical thermal power project to Maharashtra.  

🔗 Samvardhan Motherson will acquire an 11% stake in REE Automotive for $15 million. 

♻️ Sustainability Corner 

☀️ Adani Green will supply 5 GW of solar power from Khavda project to Maharashtra.  

🌱 Jindal Steel signed an MoU with Jindal Renewables to use green hydrogen in its manufacturing units.  

🔋 Jindal Renewable will initially set up a 4,500 tonnes/year green hydrogen production plant.  

🌍 Torrent Power aims for 10 GW installed renewable capacity by 2030, including a 5 GW project in Dwarka and a 1 lakh tonne/year green ammonia plant, by investing ₹64,000 crore.  

🌪️ Inox Wind got 550 MW wind power projects from IGREL Renewables.  

🌬️ Tata Power Renewable got a 400 MW wind-solar hybrid project in Maharashtra. 

🚀 IPO corner 

Upcoming SME IPOs: 

• BikeWo GreenTech Limited (Sep 20, 2024 – Sep 24, 2024) 

• SD Retail Limited (Sep 20, 2024 – Sep 24, 2024) 

• Phoenix Overseas Limited (Sep 20, 2024 – Sep 24, 2024) 

• Avi Ansh Textile Limited (Sep 20, 2024 – Sep 24, 2024) 

• WOL 3D India Limited (Sep 23, 2024 – Sep 25, 2024) 

• Rappid Valves (India) Limited (Sep 23, 2024 – Sep 25, 2024) 

• Manba Finance Limited (Sep 23, 2024 – Sep 25, 2024) 

• KRN Heat Exchanger and Refrigeration Limited (Sep 25, 2024 – Sep 27, 2024) 

• TechEra Engineering Limited (Sep 25, 2024 – Sep 27, 2024) 

• Unilex Colours and Chemicals Limited (Sep 25, 2024 – Sep 27, 2024) 

• Thinking Hats Entertainment Solutions Limited (Sep 25, 2024 – Sep 27, 2024) 

• Archit Nuwood Industries Limited (Sep 26, 2024 – Sep 30, 2024) 

• Saj Hotels Limited (Sep 26, 2024 – Sep 30, 2024) 

• Divyadhan Recycling Industries Limited (Sep 26, 2024 – Sep 30, 2024) 

• Sahasra Electronics Solutions Limited (Sep 26, 2024 – Sep 30, 2024) 

• Forge Auto International Limited (Sep 26, 2024 – Sep 30, 2024) 

News: 

• Western Carriers India IPO subscription extended to Thursday, September 19th due to bank holidays. 

• Anand Rathi IPO aims to raise ₹1,000 crore, first since 2020. 

• Avi Ansh Textile IPO subscribed 37% on the first day, indicating strong investor interest. 

• The allotment for Deccan Transcon Leasing IPO with a subscription rate ₹102.60 has been finalized. Shares to be credited on September 23rd. Company specializes in tank container leasing. 

Fed Cuts Rates, Indian Markets Soar! 

The US Federal Reserve just hit the brakes on rising interest rates, and the Indian stock market celebrated! But what does this mean for you, the everyday investor? Buckle up, because we’re about to break down this financial news in simple terms and explain why it matters. 

The Fed Cuts Rates: A Big Deal 

Imagine the Federal Reserve (Fed) as the umpire of the 

US economy. Their job is to keep things running smoothly, and one of their main tools is interest rates. 

When interest rates are high, borrowing money becomes more expensive. This can slow down the economy but also helps fight inflation (rising prices). Conversely, lower interest rates make borrowing cheaper, which can boost the economy but might also fuel inflation. 

For over a year, the Fed held interest rates high to combat inflation. But on September 19th, 2024, they surprised everyone with a 50-basis point cut (a basis point is 1/100th of a percentage point). This is the first rate cut in over four years and signals a potential shift towards a more relaxed approach. 

Why Did the Fed Cut Rates? 

The Fed worries that the US economy might be slowing down. While inflation has eased compared to 2022, the job market has shown signs of cooling. The Fed wants to prevent a recession (a period of economic decline) by making borrowing cheaper and stimulating growth. 

Indian Market Takes Flight: Here’s Why 

The Fed’s rate cut sent ripples across the globe, and the Indian stock market was one of the big winners. Here’s why: 

• Cheaper Money: Lower interest rates in the US make it more attractive for investors to put their money in emerging markets like India, where potential returns can be higher. 

• Weaker Dollar: The US dollar tends to weaken with lower interest rates. This makes Indian exports cheaper and more competitive globally, boosting Indian companies. 

• Investor Confidence: The Fed’s move signals confidence in the global economy, which reassures investors and encourages them to 

• invest in riskier assets like Indian stocks. 

The Numbers Game: What You Need to Know 

• Fed Rate Cut: 50 basis points, bringing the federal funds rate to 4.75% – 5%. 

• US Inflation: Previously at 7% in 2022, down to 2.5% in July 2024 (closer to the Fed’s 2% target). 

• Indian Stock Market: Sensex rose 237 points, Nifty 50 increased by 38 points, both reaching record highs. 

What Does This Mean for You? 

The impact on your personal finances might be indirect, but it’s still important to be aware. Here are some possibilities: 

• Market: Lower interest rates can potentially benefit the stock market in the long run. However, short-term volatility is still a possibility. 

• Borrowing Costs: If the Reserve Bank of India 

• (RBI) follows the Fed’s lead and cuts rates, borrowing for things like mortgages and car loans could become cheaper. 

• Inflation: Lower global interest rates might put some downward pressure on inflation in India, but other factors like global commodity prices can also play a role. 

The Bottom Line 

The Fed’s rate cut has positive implications for the Indian economy and stock market. It could lead to cheaper borrowing and potentially lower inflation. However, it’s important to stay informed and consult with a financial advisor before making any investment decisions. 

Looking Ahead 

The RBI will hold its bi-monthly policy review in October. 

Investors will be watching closely to see if they follow the Fed’s lead and cut rates in India. This decision will have a more direct impact on your finances. 

Upcoming key financial events for the week: