India equity benchmarks near month-high on Fed rate cut bets, earnings optimism

India’s equity benchmarks edged towards a one-month high on Wednesday, lifted by a broad-based rally as growing expectations of a U.S. Federal Reserve rate cut and optimism over an earnings rebound buoyed sentiment.

The Nifty 50 added 0.71% to 25,323.55, while the BSE Sensex rose 0.7% to 82,605.43. This was their highest close since September 19.

All 16 major sectors advanced, with mid-cap and small-cap indexes and up 1.1% and 0.8%, respectively.

The move mirrored gains across Asia, where MSCI’s broadest index of Asia-Pacific shares outside Japan rose 2% on optimism over a potential Fed rate cut.

On Tuesday, Fed Chair Jerome Powell noted that the U.S. labour market remained weak, while the economy appeared to be on a firmer footing, adding that the inflation outlook remains unchanged from September, when the central bank cut rates by 25 basis points.

Lower U.S. interest rates make emerging markets like India attractive to foreign investors as dollar and Treasury yields typically fall in such scenario.

Investors were also buoyed by prospects of an earnings recovery back home.

Bank of Maharashtra surged 7.6% to one-year high as brokerages highlighted strong growth, stable asset quality, and lower-than-expected drop in net interest margin in the second quarter.

Strong earnings from the state-run lender propelled PSU banks index 1.7% higher.

ICICI Lombard General Insurance jumped 8.9% - top gainer among financials - after reporting higher profit for the September quarter.

Persistent Systems also soared 7.2% and led IT stocks higher after reporting strong set for earnings for the September quarter.

Among other stocks, Larsen & Toubro jumped 2.3%, and was among the top three contributors to Nifty’s gains, after Jeferies raised target price for the infrastructure major.

Bucking the trend, Cyient slumped 6% as the integrated electronics manufacturer reported lower revenue and profit for July-September quarter.