Sensex up 255 points, rupee sees biggest 2 year gain of 79p

The US Federal Reserve's decision to not raise interest rates in the world's largest economy, mainly due to the fragile global macroeconomic conditions, led to a rally on Dalal Street on Friday with the sensex closing 255 points up at 26,219. Along with equities, rupee, bond and gold also rallied as the dollar weakened Stock Market Trading Tips

The domestic sentiment was also helped by strong Asian markets, although the US indices closed flat after the Fed decision on Thursday night. Marketmen here feel that US Fedchief Janet Yellen's decision to keep rates unchanged was prompted by global concerns. "Fed's stance is pro-growth. It has kept rates unchanged due to global concerns even though US employment is inching up. They are expecting that inflationary pressure will remain under check despite low rates," said Nilesh Shah, MD, Kotak Mutual Fund. 

The US rate decision also makes for a strong case for the RBI to cut rates in its policy meeting on September 29. Some economists even expect a rate cut in India before the policy meet, mainly to boost the economy which is again showing signs of stagnation. According to Soumya Kanti Ghosh, chief economic adviser, SBI, now that Fed is again holding rates, "RBI will get more room for an accommodative monetary policy stance" in its next policy review meeting Jackpot Stocks Trading Tips

Economists are also expecting that a rate hike in the US may come only in 2016 and not even in its December policy meeting. According to Ghosh, US Fed has assigned more uncertainty emanating from global economy, without pointing out to any specific country. "Although the world may like to believe it is mainly because of economic turmoil in China, but the current recession in Canada, the biggest trading partner for the US, is also posing a big challenge to the world's largest economy," he said. 

The US Fed's decision also led to a short rally in the bond market with the benchmark 10-year gilt yields softening 6 basis points (100 basis points = 1 percentage point) to close at 7.70% on Friday. As a result, rate-sensitive stocks gained in the stock market with Axis Bank, ICICI Bank, M&M, SBI and HDFC Bank among the top advancers. A lower rate usually boosts business for companies involved in banking, financial services, auto and capital goods Commodity Market Astrology Tips 

The market rally also saw FIIs turning big buyers after mostly remaining net sellers of Indian stocks for several weeks. This, in turn, boosted the rupee which strengthened 79 paise to close at 65.67 to a dollar — its biggest single-session gain in two years and also its highest close in nearly a month. 

Following the global trend, in Mumbai's bullion market gold prices too shot up by Rs 300 per 10 grams to Rs 26,500 in late trades. Globally, since gold is priced in dollars, the price of the yellow metal moves inversely with the greenback's price against other major currencies Financial Astrology