Indian Stocks Rally as Fed's Rate Cut Sparks Global Optimism

Indian stock markets surged on Thursday morning, following the U.S. Federal Reserve's decision to reduce interest rates by 25 basis points. Both the Nifty 50 and BSE Sensex benefitted from this move, reflecting a broader optimism that reverberated through global markets.

The Nifty 50 commenced trading at 25,441.05, marking a 0.44 percent increase with a gain of 110.80 points, while the BSE Sensex saw an impressive rise of 415.21 points or 0.50 percent, opening at 83,108.92. Analysts expected the rate cut, interpreting it as a promising sign for emerging markets, although they cautioned that foreign portfolio inflows may take time to stabilize.

Banking and market expert Ajay Bagga remarked that the market's positive reaction aligned with predictions, attributing it to the Fed's anticipated dovish tone focused on employment rather than inflation. While Bagga acknowledged pre-existing market optimism due to rate cut expectations, he noted disappointment with the Fed's projections for future rate reductions, which appeared more conservative than anticipated.

Emerging markets are likely to benefit from enhanced inflows as the U.S. dollar weakens. However, significant inflows into Indian markets are expected only after an earnings recovery, likely by the last quarter of 2025. Early trading showed positive movements, with the Nifty 100, Nifty Midcap 100, and Nifty Smallcap 100 indices showing notable gains.

All major sector indices opened higher, led by a 0.97 percent increase in Nifty IT, followed by gains in Nifty Media, Nifty Pharma, Nifty Auto, and Nifty FMCG. In Asia, major indices, except Hong Kong's Hang Seng, also traded positively, with Japan's Nikkei 225 seeing a significant upswing of 1.36 percent.