Indian Stock Market Rebounds on Rate Cut Optimism and Trade Deal Hopes

Indian equity markets snapped a three-day losing streak on Thursday, with both benchmark indices posting solid gains as investors digested positive cues from monetary policy developments and bilateral trade negotiations.

Fed Rate Cut Fuels Rally

The catalyst for the market’s turnaround was the Federal Reserve’s widely anticipated 25 basis point rate reduction announced on Wednesday. Following the decision, Fed Chair Jerome Powell signaled patience, stating the central bank would “wait and see” before proceeding further, with rate hikes notably absent from the base case scenario. Market participants, however, are pricing in greater downside risks, with expectations favoring multiple additional cuts beyond the single 2026 reduction projected by Fed officials.

Trade Negotiations Advance

Bolstering sentiment, India’s chief economic advisor V. Anantha Nageswaran indicated substantial progress in U.S.-India trade talks, telling Bloomberg TV that most contentious issues have been resolved with an agreement targeted for completion by March 2025. This development provided additional support despite the Indian rupee sliding to historical lows versus the U.S. dollar.

Market Performance and Index Movement

The BSE’s Sensex demonstrated resilience, initially sliding to 84,150.19 from its opening level before executing a strong recovery. The index ultimately closed with a gain of 426.86 points, representing a 0.51% advance to 84,818.13. The NSE’s Nifty50 exhibited similar strength, dropping to an intraday low of 25,693.25 before rallying to finish 140.55 points or 0.55% higher at 25,898.55, up from its opening at 25,771.40.

Sectoral Gainers Dominate

Technology, automobiles, pharmaceuticals, consumer goods and financial stocks emerged as session leaders. Eicher Motors topped the Sensex with a 2.75% surge, while Tata Steel and Kotak Mahindra Bank advanced 2.56% and 2.45% respectively. Other notable climbers included UltraTech Cement, M&M (Mahindra & Mahindra), Sun Pharmaceuticals, Tech Mahindra, HDFC Bank and Bharti Airtel, each posting gains between 1% and 1.3%. Trent, Infosys and Reliance Industries also closed in positive territory.

Within the Nifty50, Adani Enterprises led with a 2.65% jump, matched by Jio Financial Services. Dr. Reddy’s Laboratories, Grasim Industries, Cipla and Shriram Finance posted robust performances. Max Healthcare similarly registered strong upward movement.

Selective Weakness

Asian Paints, Bajaj Finance and ICICI Bank were among the limited decliners, falling 0.3% to 1%.

Breadth Indicators Positive

Market breadth remained constructive, with 2,448 BSE-listed stocks advancing against 1,743 declining issues. A further 165 securities remained flat, underscoring the broad-based nature of the recovery.