Sensex, Nifty soared to fresh record highs on Fed rate cut euphoria; IT, banking lead gains

The optimism flowed into the broader markets as well with both BSE Midcap and Smallcap rising over half a percent. The volatility index, India VIX, declined by almost 9 percent to 12.

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26 Aug, 2025 12:21

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Sensex and Nifty skyrocketed to record highs at the open on September 19 as the street cheered the US Federal Reserve's 50 basis point interest rate cut announced overnight. Rate-sensitive sectors—banking and IT—spearheaded the rally.

Sensex surged to a new high of 83,773, while Nifty 50 reached a milestone of 25,611.  At 9.45 AM, the Sensex was up 820 points or 1 percent at 83,769, and the Nifty was up 231 points at 25,609. About 1,854 shares advanced, 1,134 shares declined, and 129 shares were unchanged.

The positive sentiment extended to the broader markets, with BSE Midcap and Smallcap indices gaining over half a percent. Meanwhile, India VIX, the volatility index, eased by nearly 9 percent to 12.

The optimism flowed into the broader markets as well with both BSE Midcap and Smallcap rising over half a percent. The volatility index, India VIX, declined by almost 9 percent to 12.

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Kranthi Bathini, Director of Equity Strategy at WealthMills Securities said that the Fed's move is a positive development, especially for emerging markets like India, which has maintained a tight monetary policy. "This shift could benefit Indian markets in the medium to short term," he said.

Bathini now anticipates an early rate cut in India, potentially as early as December. "While the exact timing is uncertain, the key takeaway is that the liquidity tightening cycle appears to be over, and India is entering a period of lower interest rates," he said.

"This start to the easing cycle provides some space to (emerging markets) EMs to kick-start theirs too, but with low global volatility thus far, the RBI is likely to remain focused on domestic dynamics," Emkay Global said in its FOMC review report. "With the global market reaction having been muted thus far, the RBI still has flexibility to remain focused on domestic inflation and risk management."

Also Read | FIIs favour India vs other EMs so far in September, buying spree may build on, say experts

Meanwhile, Ajit Mishra, SVP of Research at Religare Broking said that most market participants anticipated a 25 basis point cut. "This larger cut could send mixed signals, especially with the US job data providing caution, while other indicators like consumption data were more positive," he said. He suggested that the supersized rate cut might indicate further economic challenges, such as a mild recession or stagflation.

All 13 sectoral indices were trading in the green, with Nifty IT leading the charge. The IT index climbed 1.5 percent driven by gains in Infosys, TCS, and LTIMindtree. Nifty Bank also advanced nearly 1 percent, supported by HDFC Bank, Axis Bank, and ICICI Bank.

Among individual stocks, Grasim, Bajaj Auto, Axis Bank, LTIMindtree, and NTPC led the Nifty 50 gainers list, rising 1.5-3.7 percent. Meanwhile, Dr. Reddy's, Bajaj Finserv, BPCL, HCLTech, and ONGC emerged as the worst performers, slipping 0.1-1 percent.

Asia-Pacific markets rose in volatile trading today reacting to the Fed's 50 basis point rate cut, while US stocks closed with minor losses after an initial intraday surge overnight.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.