Tale of the Tape 

Hola Amigos!

Nifty (-0.3%) and Sensex (-0.2%) gave up morning gains to end in the red as investors booked profits ahead of the Fed’s rate cut decision. Midcaps (-0.7%) and Smallcaps (-0.4%) also trended lower. PS - the Stocktwits India Momentum Index dropped over -2%. The advance-decline ratio was in favour of the bears (4:1).

Except for Financials (+1%), all the other sectors ended in the red. IT (-3%) stocks got crushed. Check out their charts below to find out why. Pharma (-1.5%) and Oil & Gas (-1%) also saw deep cuts. 

How do Indian markets react after a Fed announcement? Read our top story to find out how to place your bets.

Anil Ambani stocks have been on fire. Is it just a speculative flash in the pan move or something real? More details below.

HEG and Graphite India jumped +9% each after a major global player raised electrode prices. PS - investors are hopeful they will do the same.

ICICI Bank (+2%) market cap crossed the Rs 9 lakh cr mark for the first time!

BSE (+15%) was the top NSE 500 gainer for the second time this week as speculation over a possible NSE IPO rubbed off on the stock.

Bajaj Housing Finance fell -5% as investors rushed to book profits.

Emcure Pharmaceuticals gained +2% after Kotak initiated coverage on the stock; the brokerage sees a +8% upside from current levels.

Zee Entertainment (-1%) was in focus after it said Star had claimed $940 million in arbitration over their failed cricket broadcasting deal.

Torrent Power (+8%) hit a 52-week-high after bagging a 1,500 MW pumped hydro storage project in Maharashtra.

Here are the closing prints:

Market
Fed Rate Cut - Not A Big Deal Bro!  

The US Federal Reserve will announce its rate cut decision today! FYI - this has been long-awaited, with experts predicting that it will reduce rates for the FIRST time since Covid. What we want to know though: how will Indian markets react? Here’s a quick cheat-sheet, courtesy inputs from Capitalmind!

1) Short-term: In the last 34 years, the Fed has made 78 rate announcements. In 50 of those cases, the Nifty has traded in the green on the very next trading day. When it cuts rates by 50 bps, the Nifty sees a median return of +1.6%, a 25 bps cut results in a more modest -0.5% drop. For the F&O traders among us, that’s pretty good odds!

2) Long-term: Since the 1990s, the Fed has seen six ‘easing’ cycles,  the term used for when it slowly brings down interest rates over several months or years. During all six of those cycles, the Nifty has seen positive gains! The biggest gains of +310% were seen in the July 90 - Feb 94 easing cycle. The lowest gains (+13%) came during the July 95 - March 97 cycle. PS - the only stretches of negative Nifty returns came during the rate hike cycles in 1994 and 1997.

Big Picture: Nobody knows what the Fed is going to do. It’s also important to understand that the Fed’s actions are always taken in a broader global macro context. For instance when it cut rates by 50 bps in October 2008, the Nifty still dropped -7% the next day because well we were in the middle of a global financial crisis! That said, if the Fed DOES reduce rates, it is good news. Whether it’s enough to continue feeding this bull rally, we don’t know because a lot of this has already been priced in by markets!

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