Indian Equities Snap Three-Day Decline, Close Firmer on Fed Rate Cut and Trade Optimism

Indian stock markets successfully snapped their three-session downtrend on Thursday, with both benchmark indices advancing on the back of positive catalysts including the Federal Reserve’s monetary easing and renewed hopes for a U.S.-India trade agreement.

Policy Support Fuels Market Recovery

The Fed’s decision to trim rates by 25 basis points served as the primary driver for the session’s gains. During his post-decision remarks, Fed Chair Jerome Powell indicated the central bank would adopt a “wait and see” approach for future policy moves, notably ruling out rate increases from the baseline scenario. Traders are positioning for additional cuts ahead, even as Fed projections suggest just one more reduction through 2026, creating a supportive environment for risk assets globally, including Indian equities.

Trade Deal Prospects Boost Sentiment

Concurrent optimism surrounding potential U.S.-India trade negotiations provided additional tailwinds. India’s chief economic advisor V. Anantha Nageswaran disclosed in a Bloomberg TV interview that bilateral differences have largely been resolved, with market participants expecting a formal agreement by the first quarter of 2025. This development helped sustain buying momentum despite headwinds from currency depreciation.

Market Performance and Index Movement

The BSE Sensex, despite dipping to 84,150.19 in early trading, recovered and finished 426.86 points higher at 84,818.13, representing a 0.51% gain. The NSE’s Nifty50 similarly demonstrated resilience, closing with a 140.55-point advance or 0.55% gain at 25,898.55, after testing 25,693.25 during the intraday low.

Sector Leadership and Individual Gainers

Automobile, technology, pharmaceutical, consumer staples, and banking sectors emerged as the session’s primary performers. Within the Sensex, Eterna led with a 2.75% surge, followed by Tata Steel’s 2.56% jump and Kotak Bank’s 2.45% appreciation. Mid-cap performers including UltraTech Cement, Maruti Suzuki, Sun Pharma, Tech Mahindra, and HDFC Bank each advanced between 1% and 1.3%. Notable Nifty50 gainers included Adani Enterprises and Jio Financial Services, both rising approximately 2.65%, alongside Dr. Reddy’s Laboratories, Grasim Industries, Cipla, and Shriram Finance posting robust gains.

Selective Weakness and Breadth Indicators

Asian Paints, Bharti Airtel, Bajaj Finance, and ICICI Bank bucked the trend, declining between 0.3% and 1.0%. The broader market exhibited constructive technicals, with 2,448 BSE stocks advancing versus 1,743 decliners and 165 unchanged, reflecting the positive underlying tone despite the rupee’s descent to historic lows against the dollar.