How has Nifty performed after Fed cut rates in last three decades?
US Federal Reserve's rate outcome due for announcement later on Wednesday night, a look into the history of the last three decades reveals Nifty's median returns of +1.6% following a 50 bps rate cut by the Fed. Meanwhile, a 25 bps cut has resulted in a median loss of 0.5%.
The above findings were from a Capitalmind Financial Services study, which showed that the Fed announced a 50 bps rate cut 10 times in the last 34 years while the most frequent action by the Central Bank has been an increase of 25 bps, which has been done 39 times.
The study also showcases a resilient Nifty, irrespective of the stance Fed has taken in this period. The 50-stock index has managed to end with gains on 50 occasions out of 78 announcements made by the Fed in this period.
The Fed announcement happens after Indian markets close and they react on the next day.
The study finds outliers as well. For instance, there was a nearly 7% drop in October 2008 following a 50 bps cut in the middle of the global meltdown during the GFC.
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