Sensex and Nifty surge on positive sentiment following US Fed rate cut

The Indian benchmark indices started higher on Thursday, boosted by upbeat global cues after the US Federal Reserve cut its rate by 25 basis points.

At 9:24 am, the Sensex gained 347 points, or 0.42 per cent, to 83,041, while the Nifty gained 89 points, or 0.35 per cent, to 25,419.

The Federal Reserve reinstated its cycle of interest rate cuts, cutting rates by 25 basis points to a target of 4.0–4.25 per cent, citing changing risk dynamics in the economy. Fed officials also forecast two more rate cuts this year, anticipating rates falling to 3.50–3.75 per cent by the end of 2025.

These rate cuts were broadly expected with fears of a weakening labor market and recurring inflation.

Among large-cap indices, the Nifty Midcap 100 edged up 0.08 per cent and the Nifty SmallCap 100 jumped 0.68 per cent.

On the Nifty, top gainers were Tech Mahindra (1.10 per cent), ICICI Bank, TCS, Bajaj Finserv, and Trent. Hindalco, Bajaj Finance, Apollo Hospitals, SBI, and SBI Life Insurance were among the laggards.

Sectoral performance was headed by Nifty IT, which surged 1.5 per cent, followed by Nifty Realty (up 0.66 per cent) and Nifty Pharma (up 0.37 per cent). All the other sectoral indices were trading in positive territory except the metal sector.

The Nifty 50 had earlier stood firm above the 25,300 level, capturing psychological support and suggesting investor confidence at very high levels.

Analysts pointed out that the index is now seen having scope for further gains, with resistance likely at 25,400–25,500 levels and support at 25,000–24,900 levels.

"Since the labour market is slowing down and the GDP growth forecast for 2025 is just 1.6 per cent, maybe two more cuts are feasible this year," said VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited.

He added that the rally in the Indian market is being supported by hopes of a bounce in corporate earnings and improving news in India-US trade talks.

In the Asia-Pacific, markets were mostly green after US President Donald Trump stated that US-China trade negotiations were going well. Overnight in the US, major indices experienced a mixed session, with the Nasdaq losing 0.33 per cent, the S&P 500 losing 0.10 per cent, and the Dow gaining 0.57 per cent.

Asian markets rose solidly in the morning session, with China's Shanghai index 0.41 per cent higher, Shenzhen 1.09 per cent, Japan's Nikkei up 1.09 per cent, and South Korea's Kospi increasing by 1 per cent. Hong Kong's Hang Seng Index fell 0.08 per cent.

On Wednesday, foreign institutional investors (FIIs) sold equities net worth Rs 1,124 crore, while domestic institutional investors (DIIs) purchased equities value Rs 2,293 crore.