Indian equities surge near record highs on Fed rate cut hopes

Mumbai: India’s equity indices gained over 1% on Wednesday, tracking gains in global markets, as softer-than-expected US retail sales data reinforced traders’ expectations that the Federal Reserve will trim interest rates in December. The Sensex and Nifty came within striking distance of the record closing levels but could not break past them.

The Nifty closed at 26,205 – a few points shy of all-time closing high of 26,216 hit in September 2024, up 1.2%, or 320 points. The BSE Sensex ended at 85,609, up 1.2%, or 1,022 points. Its record closing level was 85,836.

“The increased expectations of an interest rate cut in the US boosted investor sentiment as the move could trigger foreign inflows into Indian equities as US Treasuries become less attractive,” said Gaurav Sharma, head of research, Globe Capital.

Sharma expects the upward trajectory to continue to 26,500-26,700 levels.

Elsewhere in Asia, South Korea surged 2.7% while Japan and Taiwan jumped 1.9% each. Hong Kong rose marginally higher. China, however, moved 0.2% lower. At home, all sectoral indices ended higher on Wednesday, led by the Nifty Metal index, which jumped 2.1%. The Nifty Consumer Durables and Oil & Gas indices gained 1.7% each. Nifty IT climbed 1.5% while Bank Nifty, Nifty Auto and Nifty Pharma rose 1.2%.

“The continued buying interest in large-cap stocks propelled the markets higher as index heavyweight sectors like banking and IT rebounded along with stocks like Reliance Industries,” said Ruchit Jain, head of technical research at Motilal Oswal Financial Services. Among stocks, JSW Steel emerged as the top gainer in Nifty and surged 3.7% on Wednesday. HDFC Life Insurance Company gained 2.8% while Bajaj Finserv and Bajaj Finance rose 2.5% each. Foreign portfolio investors (FPIs) bought worth a net ₹4,778 crore on Wednesday. Brokers said higher inflows could partly be on account of the block deal in Bharti Airtel, where promoters sold, though the extent of foreign purchases in the transaction could not be ascertained. Domestic institutions bought shares worth ₹6,247.93 crore. In November, global investors bought shares worth ₹7,409.4 crore.

Jain also said technical indicators are pointing to further up-move.

“The index is expected to make fresh all-time highs and move higher towards 26,400-26,500,” he said.

The Nifty Midcap 150 index rose 1.3% while Smallcap 250 ended 1.2% higher. Out of the 4,325 shares traded on BSE, 2,721 advanced, while 1,453 declined.

In the past week, the mid-cap index closed marginally higher while the small-cap index fell 0.7%.