India’s stock benchmarks ascend towards new peaks on Fed, RBI rate cut optimism

Indian equities climbed on Wednesday in a broad rally, buoyed by growing conviction in a December U.S. rate cut and strength in domestic rate-sensitives ahead of a possible Reserve Bank of India easing next week.

The Nifty 50 rose 1.24% to a 14-month high of 26,205.3, while the BSE Sensex gained 1.21% to 86,609.51, breaking a three-session losing streak.

Both benchmarks posted their best session in five months and ended about 0.4% below their September 2024 record highs.

All 16 major sectors moved higher, with small-caps and mid-caps adding about 1.3% each.

Other Asian markets rose 1.2%, tracking an uptick in Wall Street equities after data showed U.S. retail sales rose less than expected and consumer confidence weakened, bolstering expectations of a Fed rate cut.

“Renewed optimism around a U.S. rate cut has been a positive trigger for markets today as it increases the attractiveness of emerging markets such as India, for foreign investors,” said Pravesh Gour, senior technical analyst at Swastika Investmart.

Comments from two Fed policymakers favouring a December rate cut also aided sentiment.

Indian IT companies, which earn a major share of their revenue from the U.S., rose 1.5%. Metals gained 2.1% as rate cut hopes aided the demand outlook.

Rate sensitive shares were lifted by record-low inflation and comments from the RBI Governor, signalling room for further rate cuts next week, two analysts said.

High-weight financials jumped 1.4%, while banks and state-owned lenders hit record highs, rising 1.2% and 0.8%.

Auto, consumer and realty gained between 0.7% and 1.2%.

The three heaviest weighted stocks in the benchmarks, HDFC Bank, ICICI Bank and Reliance Industries, added 1.2% to 2%.

Bucking the trend, telecom operator Bharti Airtel fell 1.6% after multiple block deals at a discount. Founder Sunil Mittal-led entity will sell a stake worth at least $806 million in bulk deals, at a 3% discount to Tuesday’s close, Reuters reported, citing a term sheet.