The benchmark equity indices Sensex and Nifty opened on a firm note on Thursday, supported by gains in IT and banking stocks after the US Federal Reserve cut its key policy rate by 25 basis points and signalled the possibility of further reductions this year.
Sensex settled 320.25 points or 0.39 percent higher at 83,013.96, while the broader Nifty advanced to 25,423.60, up 93.35 points or 0.37 percent.
Among the major gainers were Infosys, HCL Tech, Tech Mahindra, HDFC Bank, Sun Pharma and Tata Motors.
Key factors behind the market rise:
1) US signals 2 more rate cuts this year: The Federal Reserve reduced interest rates by 25 basis points, its first cut of the year, and projected two more reductions ahead. Analysts said the move could draw foreign capital inflows into India, support the rupee and aid domestic equities.
"The Fed’s decision is positive for Indian markets as it strengthens the outlook for capital inflows," said Rajesh Palviya, SVP - Research, Axis Securities.
2) Strong global cues: Asian markets traded mostly higher, with indices in South Korea, Japan and Shanghai gaining, though Hong Kong’s Hang Seng was lower. US markets ended mixed overnight.
"The Fed’s signal of additional rate cuts boosted sentiment. Asian markets opened nearly 1 percent higher, while US index futures were up over 0.5 percent," Motilal Oswal Financial Services said in a note.
3) Crude declines: Brent crude slipped 0.16 percent to USD 67.86 a barrel. Lower oil prices are favourable for India as they help reduce import bills and ease inflationary pressures.
4) Volatility index: The India VIX fell 2.76 percent to 9.96, reflecting lower market volatility.
5) Hopes of early conclusion of India-US trade talks after CEA comment: Markets strengthened further after Chief Economic Advisor V. Anantha Nageswaran said at an event in Kolkata that he expected the punitive U.S. tariffs on certain imports to be lifted after November 30. He added that India’s reciprocal tariffs could ease to the level New Delhi had earlier anticipated—somewhere in the range of 10 to 15 percent.
"The ongoing rally is driven by earnings revival expectations and optimism over India-US trade talks," said V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.
6) Rise in IT stocks: The shares of Indian IT companies jumped on September 18 after the US Federal Reserve cut its interest rate for the first time since December 2024. The sharp rise in the share prices pushed the Nifty IT index higher to emerge as the top sectoral gainer on the market today. The Nifty IT index rose 1.5 percent in the morning to 37,006, extending gains for the third consecutive session.
Technical outlook
According to Anand James, Chief Market Strategist at Geojit Financial Services, the Nifty may move towards the 25,400–25,600 range. He said a downside marker is placed at 25,280, while a slip below 25,200 could open the way towards 24,800.
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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