Sensex up 300 pts, Nifty above 24,950: US Fed rate cut hopes among key factors behind market rise

Sensex, Nifty rise in August 25 trading session on hopes of US Fed rate cut.

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The equity benchmark indices rebounded on Monday tracking firm global cues, with hopes of a potential US Federal Reserve rate cut in September and strong buying in IT shares boosting investor sentiment.

Sensex climbed 329.06 points or 0.4 percent to settle at 81,635.91. During the day, it jumped 492.21 points or 0.6 percent to 81,799.06. The Nifty went up by 97.65 points or 0.39 percent to 24,967.75.

Tech stocks were the flavour in today's trading session, topping the Nifty50 chart. Infosys, TCS, HCL Tech, Wipro and Tech Mahindra were the top 5 gainers in the Nifty pack, rising up to 4 percent intraday.

Key factors behind Monday’s positive market move:

1) Fed rate cut hopes: Powell acknowledged a "shifting balance of risks" in the US economy, including signs of labour market stress, and hinted at possible "policy adjustments" in the coming months. Following his speech, traders priced in an 84 percent chance of a September cut.

"Powell’s remark that the shifting risk balance may warrant policy adjustment clearly indicates a rate cut in September. The US stock market gave a thumbs up to this comment," said V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

2) IT buying: IT shares surged after Powell’s comments and a bullish view by JPMorgan, which upgraded TCS to ‘Overweight’ from ‘Neutral’ and raised its price target to Rs 3,800, implying a 24 percent upside. The Nifty IT index jumped over 2 percent in early trade.

Powell's September rate cut hint, JPMorgan's TCS upgrade fire up IT shares

3) Global cues: Asian markets traded higher with South Korea’s Kospi, Japan’s Nikkei, Shanghai Composite and Hong Kong’s Hang Seng in the green. On Wall Street, the Dow Jones gained 1.89 percent, Nasdaq rose 1.88 percent and the S&P 500 climbed 1.52 percent on Friday.

"Globally, the Dow scaled record highs and Powell hinted at a rate cut. Yet, caution is advised as Trump’s tariff deadline looms on August 27," said Prashanth Tapse, Senior VP (Research), Mehta Equities.

4) Rupee gains: The rupee appreciated 18 paise to 87.34 against the US dollar in early trade, tracking positive domestic equities. Forex dealers said the near-term direction will hinge on the August 27 tariff implementation and key US economic data before the Fed’s September 17 meeting.

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.