Indian shares track Asia higher on US-China trade optimism, Fed rate cuts hopes

India shares rose on Monday, tracking their Asian peers, as optimism over signs of progress in U.S.-China trade talks lifted sentiment, while soft U.S. inflation data boosted bets for additional Federal Reserve rate cuts this year.

The Nifty 50 rose 0.66% to 25,966.05 and the BSE Sensex added 0.67% to 84,778.84. Both benchmarks closed about 1.2% below all-time highs hit in September 2024.

Fourteen of 16 major sectors logged gains. The broader small-caps and mid-caps added about 0.8% and 0.9%, respectively.

Other Asian markets rose 1.6% after top Chinese and U.S. economic officials hashed out the framework of a trade deal for U.S. President Donald Trump and Chinese President Xi Jinping to decide on later this week.

Meanwhile, U.S. consumer prices cooled in September, reinforcing hopes that the Fed will cut rates at its policy meeting on Wednesday and again in December.

Lower U.S. rates typically make emerging markets such as India more attractive to foreign investors.

“With the Nifty hovering just about 300 points below its all-time high, it is fair to say markets have climbed the wall of worry,” said Raghvendra Nath, managing director at Ladderup Asset Managers.

“For a decisive move to new highs, incremental triggers such as an earnings rebound and easing global headwinds will be essential.”

Metals and oil and gas indexes rose 1.2% and 1.5%, respectively, as easing U.S.-China trade tensions reduced fears of tariff-related weakness in global demand.

State-owned lenders jumped 2.2% and hit a record high after Reuters reported that the government is planning to allow direct foreign investment to up to 49% from the current 20% limit.

Among individual stocks,oil-to-telecom conglomerate Reliance Industries the third heaviest stock on the benchmarks, gained 2.2%. Investec said the company’s $100 million JV with Meta Platforms is a major step India’s AI-driven digital growth.

IT firm Coforge climbed 4% after posting higher-than-expected quarterly profit on improved client spending.