(RTTNews) - Indian shares posted strong gains on Friday to extend the previous session's rally as investors priced in more Fed rate cuts next year.
At its meeting on Wednesday, the Federal Reserve signaled the end of tightening and hinted it would reduce rates by 75 basis points next year.
It is believed that the Fed's projections are more conservative, and the U.S. central bank could slash rates even further than forecast in 2024.
The prospects of lower borrowing costs next year dented the dollar and spurred a decline in Treasury yields.
Any drop in the interest rates means that more money will flow into emerging markets and India will be the biggest beneficiary.
Markets currently price in around a 75 percent chance of a rate cut in March. Benchmark indexes Sensex and Nifty both hit record highs for another day, reflecting upbeat global sentiment.
The benchmark S&P BSE Sensex soared 969.55 points, or 1.37 percent, to 71,483.75 while the broader NSE Nifty index closed at 21,456.65, up 273.95 points, or 1.29 percent, from its previous close.
IT stocks were among the top gainers as global bond yields continued to retreat on rate cut hopes. Infosys, TCS and HCL Technologies soared 5-6 percent.
Metal stock such as Tata Steel, JSW Steel and Hindalco surged 2-3 percent as metal prices jumped after mixed economic data and positive signals from policymakers in China.
State Bank of India shares rallied 4 percent. The state-run lender bought a 6.35 percent stake in in Canpac Trends, which provides paper-based packaging solutions, for nearly Rs 50 crore.
