Fed Cuts Rates by 50bps: What It Means for Indian Markets

• Indian frontline indices traded within a narrow range amid volatility on Wednesday, as investors remained cautious ahead of the key US Federal Reserve meeting, which is expected to announce the first rate cut in four years.

• The market saw a struggle between falling IT stocks and strong financial shares. A sharp decline in IT stocks weighed heavily on the market, dragging the frontline indices lower, while pharmaceutical stocks also witnessed notable losses.

DCM Shriram +0.80%

• The stock jumped over 4% after the BSE gave 'no adverse' observations on the company's proposed merger plan. A year ago, Shriram Group approved a scheme to merge Lily Commercial with DCM Shriram Industries.

• The board has also approved the demerger of DCM Shriram Industries into two separate entities: DCM Shriram Fine Chemicals and DCM Shriram International.

Zee Entertainment (1.34%)

• Zee Entertainment Enterprises Ltd. shares dropped on Wednesday following the company's announcement that Star India Pvt. had initiated arbitration proceedings against it.

• Zee has denied all claims made by Star India, including the $940 million (around Rs 8,000 crore) in damages sought after Star filed a 'Statement of Case' with the London Court of International Arbitration (LCIA), citing termination of their alliance agreement.

• India is in discussions to address the surge in steel imports. (RT)

• RBI is unlikely to cut interest rates in 2024, according to SBI Chief Setty. (ET)

• Banks have informed the Finance Ministry that RBI's draft LCR norms could impact lending. (ET)

• India intends to continue purchasing cheap Russian oil, according to the oil minister. (RT)

Fed Cuts Rates by 50 Basis Points: Impact on Indian Markets

The U.S. Federal Reserve has cut its key interest rate by 50 basis points, signalling an end to its inflation-fighting measures. This reduction, the first since 2020, could influence Indian markets in several ways:

• Foreign Inflows: A rate cut typically weakens the U.S. dollar, which can encourage foreign institutional investors (FIIs) to direct capital into emerging markets like India. This could boost Indian equities.

• RBI Response: The Reserve Bank of India (RBI) often aligns its monetary policy with the Fed’s actions. With manageable inflation levels in India, there is potential for rate cuts by the RBI, which would benefit rate-sensitive sectors like housing, finance, and auto.

• Sectoral Gains: Rate-sensitive sectors such as IT, banking, and real estate are expected to benefit.

• NTPC Green Energy files for a Rs 10,000 crore ($1.2Bn) IPO. (MC)

• IREDA has received approval to raise Rs 4,500 crore ($537Mn) via QIP, with the government set to dilute up to 7% stake. (MC)

• Ellenbarrie Industrial Gases files draft papers for a Rs 400 crore ($47.8Mn) IPO. (MC)

• Western Carriers IPO was subscribed nearly 14 times on day 4, with strong support from NII. (MC)

• Arkade Developers IPO was 29.44 times subscribed on Day 3, led by NIIs. (MC)

• Northern Arc Capital IPO was 20.18 times subscribed on the third day of bidding. (MC)

This week’s mainboard IPO schedule

• Western Carriers

  • Offering Period: 13 September- 18 September, 2024

  • Listing Date: 23 September, 2024

  • Issue Price: 163-172

  • Lot Size:

• Arkade Developers

  • Offering Period: 16 September- 19 September, 2024

  • Listing Date: 24 September, 2024

  • Issue Price: 121-128

  • Lot Size: 110

• Northern Arc Capital

  • Offering Period: 16 September- 19 September, 2024

  • Listing Date: 24 September, 2024

  • Issue Price: 249-263

  • Lot Size: 57

M&A / Investments

• SBI Mutual Fund, Mithun Sacheti, and others are set to invest Rs 900 crore ($107.6Mn) in Nazara Technologies. (BS)

• Aurobindo is set to acquire the remaining 49% stake in GLS Pharma for Rs 22.5 crore. (BS)

• RBI has approved the merger of Aditya Birla Finance with its parent company. (BS)

Debt

• Sunsure Energy signs a Rs 10,000 crore ($1.19Bn) loan agreement with REC to develop green energy projects. (ET)

VC