Indian equity markets experienced a notable upswing on Thursday, as benchmark indices Sensex and Nifty 50 posted gains of up to 0.8%. The BSE Sensex rose by more than 600 points, climbing past the 73,860 level, while the Nifty 50 gained 175 points to trade near 22,875. The positive momentum extended to broader markets, with the Nifty Smallcap 100 and Nifty Midcap 100 indices recording increases of approximately 0.6%.
Market breadth remained firmly in the positive, with the National Stock Exchange (NSE) reporting 1,995 advancing stocks against 1,228 declines, while 105 issues remained unchanged. Among the sectoral indices, Nifty FMCG led the charge with a rise of about 2%, followed by gains of up to 1% in Nifty PSU Bank and Nifty IT. In contrast, the Nifty Auto index trended lower, slipping into the red.
The rally was largely attributed to the US Federal Reserve's decision to keep interest rates unchanged, a move that provided a boost to global investor sentiment. The Fed's policy stance coincided with a slight softening of the American dollar, which allowed the Indian rupee to strengthen by 11 paise to 95.17 against the US currency. Additionally, the benchmark 10-year US Treasury bond yields eased below the 5% mark, a development that typically reduces the relative attractiveness of debt instruments compared to equities.
Domestic factors also played a significant role in the market's performance. Investor optimism has been fueled by recent signals from Finance Minister Nirmala Sitharaman regarding ongoing discussions around potential adjustments to the long-term capital gains tax (LTCG) and securities transaction tax (STT). According to reports from Jefferies, any reduction in LTCG tax could serve as a catalyst for foreign investors to re-enter the Indian market, particularly benefiting large-cap stocks in the banking and energy sectors.
Foreign Institutional Investors (FIIs) showed renewed activity, remaining net buyers of Indian equities for consecutive sessions. Provisional data from the NSE indicated that FIIs bought shares worth approximately Rs 872 crore on Wednesday, following a net purchase of Rs 4,198 crore on Tuesday. While analysts acknowledge these inflows, they maintain that a definitive trend reversal remains unconfirmed given the recent period of heavy selling.
Individual stock performance on the Sensex reflected the day's positive trend. Adani Ports led the gainers with a jump of more than 4%, while other major stocks including Power Grid, Kotak Mahindra Bank, HUL, NTPC, ITC, Reliance Industries, Titan, TCS, and Infosys saw gains between 1% and 3%. Despite these recoveries, experts highlight that the Sensex and Nifty remain significantly lower on a year-to-date basis, though some analysts believe valuations in specific pockets have become more reasonable following the recent market correction.
Market participants are now bracing for potential volatility as the monthly expiry day approaches. V.K. Vijayakumar, Chief Investment Strategist at Geojit Investments, noted that while the Fed’s status quo is a positive development, significant headwinds persist. These include elevated Brent crude oil prices, which remain near $115 per barrel, and persistent global competition for foreign capital, particularly as international investors focus on the technology and artificial intelligence sectors in South Korea and Taiwan.
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