The benchmark Sensex at BSE jumped by over 600 points or 1 per cent in the early trading hours on Monday to hit a six-week high of 60,600 in line with its Asian market peers as the market expects that the Federal Reserve may lower the pace of rate hike, set to be announced on Wednesday. In India, the recovery on Monday was driven by IT stocks and strength in the banking scrips.
The strong opening on Monday came in line with global markets as Nikkei and Japan and Hang Seng in Hong Kong were up by 1.6 per cent and 0.9 per cent respectively.
The rise in Asian markets comes on the back of growing hope that the Federal Reserve may go for a lower rate hike. While the Federal Reserve has raised rates by 300 basis points in its five meetings beginning March 2022, in the last three meetings it raised rates by 75 basis points.
As the market expects that the rate hike could be lower, when the Fed announces its decision on Wednesday, the sentiments have turned positive lifting the stock markets.
Even as the global markets have been under pressure over the last few months on account of high inflation and the central banks raising the interest rates, the Indian markets have witnessed a smart recovery over the last four months after having closed at a near-term low of 51,360 on June 17, 2022. Since then the Sensex has gained nearly 18 per cent to trade at levels of 60,600 on Monday.
Analysts say that while Indian markets came under pressure in the first half of the calendar amid concerns over high crude prices, inflation, interest rates and geopolitical developments with regard to the Russia-Ukraine war, a stable crude oil price over the last couple of months has come as a big relief to the Indian markets. While Brent crude prices had hit levels of $120 per barrel in June, they have softened and remained stable under $100 per barrel over the last couple of months. On Monday, it was trading at $93 per barrel.
