The shares of real estate and metal companies recorded sharp gains on August 25 as market expectations for US Federal Reserve's rate cut increased after Chair Jerome Powell's remarks at the Jackson Hole Economic Policy Symposium.
The rise in the share prices pushed the Nifty Realty index up nearly 1 percent to hover around 918 in the early trading hours of Monday, while Nifty Metal index rose over 1 percent to stand at 9,477, snapping a two-day losing streak.
Federal Reserve Chair Jerome Powell on August 22 said that the weak job market may soon force the American central bank to cut interest rates.
"Downside risks to employment are rising," according to Powell's prepared remarks at the Jackson Hole Economic Policy Symposium. He added that "the effects of tariffs on consumer prices are now clearly visible" with high uncertainty in the coming months.
Most investors now expect a 25-basis-point Fed rate cut next month. "Fed chief Powell's remark at Jackson Hole that 'there is a downside risk to unemployment and shifting risk balance may warrant policy adjustment' clearly indicates a rate cut in September," said VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited.
A rate cut in the US could reduce borrowing costs for foreign investors, encouraging them to invest in higher growth markets in India. This boosts real estate and metal stocks. Additionally, investors expect the RBI to follow Fed in the pursuit of a rate cut, if any. This too can positively impact the stocks.
Jindal Stainless Steel was the top gainer on the Nifty Metal index, rising nearly 5 percent to trade at Rs 813.35 apiece. Hindalco Industries and National Aluminium Company (NALCO) shares gained nearly 2 percent, while NMDC, Hindustan Zinc, Vedanta and SAIL shares were up more than 1 percent each.
Tata Steel, Welspun Corporation, Adani Enterprises, JSW Steel and Hindustan Copper shares rose up to 1 percent.
On the realty index, Brigade Enterprises was the top gainer. The shares of the company rose over 1 percent to trade at Rs 974 apiece. Godrej Properties shares also gained more than 1 percent. DLF and Sobha shares were up nearly 1 percent each.
Raymond, Prestige Estates, Macrotech Developers (Lodha), Phoenix Mills and Oberoi Realty shares were trading in the green with marginal gains.
Also read: Our LIVE blog on stock market updates
Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.
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