Metal and realty shares gained on October 27 after a softer-than-expected US inflation print boosted expectations of a rate cut by the US Federal Reserve during the October 28–29 policy meeting.
The Nifty Realty index rose 1.5 percent to extend gains for a third straight session, with nine of the 10 constituents of the index trading in the green. Brigade Enterprises, Sobha, Godrej Properties and Prestige Estates Projects were among the leading gainers, advancing around 3 percent.
Lower interest rates generally reduce borrowing costs for developers and homebuyers and is seen as positive for the real estate sector.
Metal counters too firmed up on hopes of policy easing by the RBI after the US Fed’s decision. Lower interest rates typically support industrial activity and infrastructure spending, aiding demand for metals. Copper prices holding near a 16-year high too supported the sentiment.
Welspun Corp, Hindustan Copper, Jindal Steel, Hindalco Industries and Tata Steel gained up to 5 per cent. This marked the fourth consecutive session of gains for the Nifty Metal index.
Several analysts have said that the markets have already priced in a 25 bps reduction by the US Fed, and will track the guidance on the trajectory beyond October amid chorus of further cuts in coming months.
A section of market participants expect the Reserve Bank of India as well to cut key policy rates during the December review. Brokerages such as Nomura, Capital Economics and MUFG have shared notes hinting at the scope for another move in February that could bring the repo rate to 5 percent.
Prospects of a US-China trade too added to the markets' optimism, as iron ore futures rose to their highest in nearly two weeks on optimism over easing trade tensions between China and the United States outweighing demand concerns in China.
(Inputs from Reuters)
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