Fed Cuts Interest Rates By 75 Basis Points To 2.25%:Markets To React Positively.

19 Mar

Posted by Shyam as Market News, Opinions

Well that was some thing most expected. Even I had written in my previous posts that a Fed rate cut in the current situation is imminent. There was no escaping to this with US markets and its economy hitting the lower circuits almost every other day.

The Fed which met yesterday night(Indian timing) slashed the key interest rates by 75 basis points or 0.75% to 2.25%. This is seen as one of the most aggressive moves by Fed in a quarter century. You can read how the Fed rate cut affects the Indian markets here. But some of the traders were expecting a cut of around 100 basis points.

The Dow and Nasdaq reacted positively to this news again a trigger as I said yesterday. US markets ended the day by gaining over 420 points. This interest rates are lowest since 2004. Meanwhile the data shows that FIIs sold over Rs 1000 crores shares on Tuesday or March 18th. Fed had already cut the interest rates thrice in this year which is something in close resemblance with what happened in US in 1982 when it was recovering from such a economic crisis.

The Asian markets are also trading up with Nikkei 225 and Hang Seng gaining 2.75% each at 8 AM IST. So now its the time for the Indian markets to recover what it had lost 2 days back. Markets are expected to open with a huge gap up and hopefully we’ll be able to sustain the uptrend till the end of the session. It may be a temporary relief but its much needed to boost the moral of the investors. Now lets see how far the Indian markets recover in todays session.