Indian equity markets witnessed a remarkable turnaround during Thursday's early trading session, with benchmark indices bouncing back strongly after recent declines. The resurgence was fueled by growing optimism about potential interest rate cuts from the US Federal Reserve and renewed interest from foreign investors.
Market Performance Highlights
The 30-share BSE Sensex jumped significantly, climbing 475.22 points to reach 72,315.78 in initial trades. Similarly, the broader Nifty index demonstrated robust performance, gaining 145.9 points to settle at 21,958.25.
Sectoral Performance and Key Gainers
Among the Sensex constituents, several major players led the charge upward. Tech Mahindra emerged as the top performer with impressive gains, followed by Tata Steel, Tata Consultancy Services, Infosys, and HCL Technologies. The banking sector also showed strength, with ICICI Bank, Kotak Mahindra Bank, and Axis Bank all trading in positive territory.
What's Driving the Market Optimism?
Federal Reserve Rate Cut Expectations
The primary catalyst behind this market resurgence appears to be the changing sentiment regarding US monetary policy. Federal Reserve Chair Jerome Powell's recent testimony before Congress reinforced market expectations that the central bank might consider rate cuts later this year, provided inflation data continues to show improvement.
Foreign Institutional Investors Return
Adding to the positive momentum, foreign institutional investors (FIIs) turned net buyers in Indian equities. According to exchange data, FIIs purchased shares worth ₹2,170.32 crore on Wednesday, marking a significant shift from their recent selling spree.
Broader Market Trends and Global Context
The positive sentiment extended beyond large-cap stocks, with both the BSE Midcap and Smallcap indices showing gains of up to 0.70%. Globally, most Asian markets mirrored this optimism, with Seoul, Tokyo, Shanghai, and Hong Kong all trading higher.
This market recovery comes as a welcome relief to investors who had been concerned about stretched valuations and the timing of potential rate cuts. The combination of dovish signals from the Fed and renewed foreign interest has created a perfect storm for bullish sentiment in Indian markets.
