Sensex Rises 650 Points, Nifty Above 25,350 on Fed Rate Cut Hopes and Strong Global Cues

Sensex Rises 650 Points, Nifty Surpasses 25,350 on Fed Rate Cut Hopes

India’s equity markets witnessed a strong rally on Wednesday, with the Sensex gaining 654.62 points (0.8%) to 82,684.59 and the Nifty rising 206.80 points (0.82%) to 25,352.30. The rally was fueled by hopes of a US Federal Reserve rate cut, easing domestic volatility, a recovering rupee, and positive global market trends.

Key gainers included Nestle India, Jio Financial Services, Asian Paints, HDFC Life Insurance, and Bajaj Finserv, each rising as much as 3 percent. Analysts said the broad-based rally reflected improving investor sentiment amid expectations of easier monetary conditions in the US and supportive domestic fundamentals.

Fed Rate Cut Hopes Lift Investor Sentiment

Investor optimism surged after US Federal Reserve Chair Jerome Powell highlighted weakness in the US labor market alongside a firm economic footing. Powell’s comments raised expectations of another rate cut later this month, which could attract foreign capital to emerging markets like India by reducing dollar and Treasury yields.

“The sharp slowdown in hiring is increasingly threatening the US economy, hinting at the possibility of two more rate cuts this year,” said Jigar Trivedi, Senior Research Analyst at Reliance Securities.

A potential Fed rate cut typically strengthens emerging market equities, as lower US interest rates encourage capital inflows and improve valuations for risk assets.

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Market Volatility Eases

The India VIX, a key indicator of market volatility, declined nearly 4 percent to 10.76, indicating lower uncertainty. A subdued VIX often encourages investors to increase equity exposure, contributing to a positive market momentum. Analysts noted that reduced volatility helped spur risk-taking, boosting buying interest in key sectors.

Rupee Recovery Supports Equity Rally

The Indian rupee strengthened 88 paise to 87.93 per US dollar, rebounding from an all-time closing low. The recovery was supported by a weaker dollar index, falling crude prices, and potential intervention by the Reserve Bank of India (RBI). A stronger rupee often improves investor confidence and attracts foreign institutional inflows, further supporting equities.

Crude Oil Prices Decline

Global benchmark Brent crude slipped 0.19% to USD 62.27 per barrel after the International Energy Agency warned of a potential supply surplus in 2026 amid weak demand and rising output. Lower crude prices are favorable for India, which imports most of its oil, helping contain inflation and reduce import costs.

Global Markets Provide Positive Cues

Asian markets traded higher, with South Korea’s Kospi, Japan’s Nikkei 225, Shanghai’s SSE Composite, and Hong Kong’s Hang Seng indices all in positive territory. Wall Street futures also indicated a firm start for US markets later in the day. Analysts said strong global cues provided additional support for domestic equities, reinforcing optimism among investors.

Early India-US Trade Deal Hopes

Market sentiment was further buoyed by growing expectations of an early India-US trade agreement. Rising tensions between the US and China, including Beijing’s export restrictions on rare earth minerals, prompted the US to strengthen trade ties with allies including India. Analysts said this could create long-term opportunities for Indian exporters and positively influence the equity market.

Technical Outlook for Nifty

Anand James, Chief Market Strategist at Geojit Financial Services, noted that while the market remains cautious, a breakout above 25,330 could open the path for further gains. The 20-day simple moving average (SMA) provided support for the rally, limiting declines in recent sessions.

“While we acknowledge the prevailing bearish pattern, a move beyond 25,230 could turn the market positive,” James said.

Market experts highlighted that sustained buying in key sectors such as finance, FMCG, and IT could drive the Nifty higher in the near term, provided global cues remain supportive.

Factors Driving Wednesday’s Market Rally

• Fed rate cut hopes: Jerome Powell’s comments strengthened investor sentiment.

• Lower volatility: India VIX fell to 10.76, boosting risk appetite.

• Rupee recovery: Strengthening rupee attracts foreign inflows.

• Falling crude prices: Brent crude decline benefits India’s import costs.

• Strong global markets: Positive Asian indices and US futures supported domestic equities.

• Trade optimism: Prospects of an India-US trade deal improved investor confidence.

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