Sensex gains 356 pts, Nifty ends above 25,100; financial, auto stocks lead, Fed rate cut hopes lift sentiment

Indian equities ended higher on Friday, with the Sensex rising nearly 356 points and the Nifty closing above the 25,100 mark, buoyed by strength in metals, financials and auto stocks. Gains came despite mixed market breadth, amid growing expectations of a US Federal Reserve rate cut next week. Investors drew confidence from upbeat global cues and easing volatility.

At close, the BSE Sensex was up 356 points, or 0.44 percent, at 81,905, while the NSE Nifty 50 advanced 109 points, or 0.43 percent, to 25,114. As many as 1,922 shares advanced, 2,036 declined, and 138 were unchanged. The India VIX eased over 2 percent to 10.12, signalling low near-term risk perception among market participants.

Here are the key factors driving the market gains today:

Financial, metal and auto stocks lift Nifty

Bajaj Finance shares led the Nifty gainers with a 3.4 percent surge, followed by Bharat Electronics, which rose 3.3 percent amid a strong session for defence stocks today. Shriram Finance and Bajaj Finserv climbed about 2 percent each, while Hindalco, Eicher Motors, Axis Bank, Maruti Suzuki, Tata Motors and Infosys gained 1-2 percent.

On the flip side, HUL shares fell 1.6 percent to emerge as the top Nifty loser. Bajaj Auto, Wipro, Trent, IndusInd Bank, Asian Paints, Bharti Airtel, Titan and ONGC also traded in the red.

Sectoral trends reflect selective strength

Among sectoral indices, Nifty Metal outperformed with a 0.9 percent gain, followed by Nifty Pharma (0.5 percent), Auto (0.5 percent), Private Bank (0.4 percent), Infrastructure (0.4 percent), IT (0.3 percent) and Bank (0.3 percent).

FMCG stocks were the biggest drag, with the Nifty FMCG index slipping 0.6 percent amid profit booking after three days of rise. The sentiment also stayed muted with Moneycontrol reporting that companies may not be able to cut retail prices of their low-value packaged goods in line with the recent GST rate cuts. Media stocks also saw mild profit-taking, while PSU Bank and Realty indices ended in the red.

The Nifty Smallcap100 index rose 0.6 percent, while the Midcap100 was up 0.2 percent, reflecting a modestly positive undertone in the broader market.

Global cues supportive amid easing volatility

Global risk sentiment stayed firm after US consumer price index (CPI) data for August came broadly in line with expectations, reinforcing bets of an imminent US Fed rate cut. Asian and US markets have stayed positive over the past two sessions, lending support to domestic sentiment. The India VIX’s over 2 percent fall to 10.12 reflected calm in the market.

Fed rate cut bets grow after US CPI print

Madhavi Arora, Chief Economist at Emkay Global Financial Services, said the data showed some tariff pass-through but affirmed the case for monetary easing. “August’s CPI was largely in line, removing a key risk for the markets ahead of next week’s FOMC meeting. While this print shows that inflation is unlikely to get better soon, the sharp weakening in labour market dynamics means that a 25 bps cut next week is now certain, with the market now pricing three cuts in total in 2025,” she said.

The headline US CPI rose 0.4 percent month-on-month (vs 0.3 percent estimated) and 2.9 percent year-on-year, while core CPI increased 0.3 percent month-on-month and 3.1 percent year-on-year, in line with estimates. Madhavi Arora added that while inflation may not be worsening, it is not improving much either, and the US Fed is now “almost certain to turn towards the employment side of its dual mandate and restart its easing cycle next week.”

SEBI board meeting eyed for potential market reforms

Back home, market participants also kept a close watch on the Securities and Exchange Board of India’s (SEBI) board meeting scheduled later in the day, where a slew of market-related measures could be taken up.

There has been speculation about potential changes to the F&O market structure, with CNBC-TV18 reporting on Thursday that the regulator may issue a consultation paper by next month proposing a glide path from weekly to monthly expiries. Sources also indicated possible recommendations to boost cash market volumes.

In addition, discussions are expected around easing IPO eligibility norms for very large companies and allowing more time to meet the minimum public shareholding requirement. Any announcements from the meeting, which will be followed by a press conference, are likely to influence market sentiment going into the next week.

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