Stock market: The stock market witnessed a sudden rally today on 12 September and the Sensex once again touched its new record high. This sharp jump has increased the market cap of BSE by more than Rs 6.5 lakh crore today. With this, the Sensex touched the level of 83,000 points for the first time today. The reasons for today’s rise include the reduction in inflation in America, the expectation of return of foreign investors and the reduction in crude oil prices. Apart from this, the great response being received by the IPO is also being seen as the reason for today’s rise.
Market cap of companies listed on BSE is Rs 467.22 lakh crore
With today’s gain, the total market cap of all BSE-listed companies hit a new high of Rs 467.22 lakh crore, up 1.4 per cent from its previous close. The benchmark Sensex rose 1.77% or 1,440 points to close at 82,962, while the BSE mid and smallcap indices gained 1.32% and 0.8% respectively. The rally comes at a time when investors await the US Federal Reserve’s meeting next week in which it will take a decision on interest rates.
What do experts say about today’s rise?
Independent analyst Ajay Bagga attributes this rally to the possibility of the US Fed cutting interest rates during the FOMC meeting on September 18. Bagga said that after a cautious start to September due to seasonal reasons, investors are starting to increase their allocation to EM. This change along with strong domestic inflows is fuelling momentum in India’s equity market.
Prashant Tapase, analyst at Mehta Equities, said although the US CPI data is not enough to call for an aggressive Fed rate cut, recent economic readings suggest that the US may face growth challenges going forward, and hence the Fed may opt to cut benchmark rates.
Deflation risk in China
Earlier, Bloomberg reported that China may cut interest rates on $5 trillion of mortgages this month to boost consumption. Some Chinese banks are preparing to cut rates by up to 50 basis points. The move is aimed at easing China’s domestic financial burden as domestic spending remains weak and deflation risks persist. There are also growing concerns about China missing its 5% growth target and a drop in stock market sentiment, the report said.
Global markets have also risen, although the US inflation report came in slightly higher than expected. Some US traders are expecting the Fed to cut interest rates by about 100 basis points by the end of 2024, starting with next week’s meeting on September 17-18.