Indian stock markets rallied 1.2 per cent on Wednesday, soaring ahead on rising expectations of another interest rate cut by the US central bank, a decline in crude oil prices, and inflows from foreign funds.
While benchmark Sensex rebounded by 1,022 points, Nifty reclaimed the 26,000 level on across-the-board buying, and set to hit new record highs in the coming days.
The 30-share BSE Sensex jumped 1,022.50 points or 1.21 per cent to settle at 85,609.51. During the day, it surged 1,057.18 points or 1.24 per cent to 85,644.19.
The 50-share NSE Nifty zoomed 320.50 points or 1.24 per cent to end at 26,205.30, just 10 points shy of its all-time high. In intra-day trade, Nifty rallied 330.35 points or 1.27 per cent to 26,215.15.
Analysts attribute the record gains to a sharp decline in Brent crude prices, which will help keep the current account deficit in check on account of lower outflow of oil imports.
Additionally, increasing optimism surrounding a potential truce between Russia and Ukraine also bolstered the investor sentiment, experts said.
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Foreign Institutional Investors bought equities worth ₹785.32 crore on Tuesday, and Domestic Institutional Investors (DII) also purchased stocks worth ₹3,912.47 crore, according to exchange data.
“Indian markets staged an impressive rally on Wednesday, with broad-based buying across sectors reflecting the sharp risk-on sentiment in global equities,” said Ponmudi R, CEO of Enrich Money, an online trading and wealth tech firm, adding that the surge was supported by “growing expectations of a US Federal Reserve rate cut in December, after the latest US economic releases – including September retail sales and producer price data – signalled softening demand and cooling inflation”.
Among the Sensex firms, Bajaj Finserv, Bajaj Finance, Tata Steel, Reliance Industries, Sun Pharma, Tata Motors Passenger Vehicles, Axis Bank and Infosys were among the major gainers, and Bharti Airtel and Asian Paints emerged as the laggards from the pack.
Market participation was broad-based, with metals, energy and IT leading the gains. Mid-cap and small-cap indices also advanced over 1 per cent.
In Asian markets, South Korea’s Kospi, Japan’s Nikkei 225 index and Hong Kong’s Hang Seng index settled in positive territory after Kospi surged 2.67 per cent, Nikkei 225 index jumped 1.85 per cent and Hang Seng index climbed 0.13 per cent. Shanghai’s SSE Composite index, however, ended lower.
Markets in Europe were also trading in the green, as were the US markets, which ended higher on Tuesday.
“On a global scale, market sentiment improved with rising expectations of a US Federal Reserve rate cut in December, alongside softer US yields and a weaker dollar. Furthermore, increasing optimism surrounding a potential truce between Russia and Ukraine is enhancing risk appetite, fostering a positive outlook for the upcoming year,” agreed Vinod Nair, Head of Research, Geojit Investments Limited.
Brent crude, the global oil benchmark, went up marginally by 0.03 per cent to USD 62.50 per barrel. On Wednesday, Brent was trading under USD 62 per barrel against USD 65 per barrel three weeks ago. A recent report published by JP Morgan projected that the supply glut could keep prices under check and could even fall to USD 30 per barrel by end of 2027.
Ajit Mishra – SVP, Research, Religare Broking Ltd, said renewed optimism over a potential rate cut by the US Federal Reserve in December, along with expectations of a 25-basis-point repo rate cut by the Reserve Bank of India early next month, had improved investor sentiment.
“Additionally, easing crude oil prices – driven by hopes of progress toward peace between Ukraine and Russia – provided further support,” he added.
On Tuesday, the Sensex dropped 313.70 points or 0.37 per cent to settle at 84,587.01. The Nifty declined 74.70 points or 0.29 per cent to 25,884.80.
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