The impact of the US Federal Reserve rate cut:
The impact of the US Federal Reserve rate cut

On day two following the US Federal Reserve’s surprise interest rate decrease, foreign investors increased their bets in Indian markets, sending the benchmark Nifty 50 and Sensex indexes to all-time highs.

Undoubtedly, FTSE’s semi-annual rebalancing of its esteemed All-World Index contributed to a portion of the ₹14,000 crore preliminary purchase on Friday by international institutional investors.

The remaining portion was driven by active buying as a result of the US rate drop, which is anticipated to increase capital inflows into developing nations such as India.

FIIs net invested ₹14,064.05 crore on Friday, the ninth highest amount in a single day since FIIs started investing in Indian markets, making investors wealthy by $7 trillion. Of this, ₹7,000–8,000 crore came from investments made by international passive funds, with the remaining amount coming from active buying.

The FTSE All-World Index, like the MSCI, is used by global investors to decide on allocating funds to developed and emerging market stocks. The index undergoes changes twice a year, in March and September.

This time around, brokerage Nuvama estimated ICICI Bank Ltd to have attracted $200 million (about ₹1,670 crore) and Kotak Mahindra Bank Ltd, $87 million ( ₹726 crore).

Before closing 1.48% higher at 25,790.95 on Thursday, the Nifty 50 jumped to a new high of 25,849.25 points on Friday.

After shooting up to a record 84,694.46, the 30-stock Sensex ended the day up 1.63% at 84,544.31 points.

The rupee strengthened by 11 paise to settle at 83.57 against the dollar, while spot foreign gold reached a record $2,609 an ounce as investors holding other currencies expected to see a rise in demand for the yellow metal due to a declining dollar.