Sensex, Nifty surge on rally in US markets, foreign fund inflows

Stock market benchmark indices Sensex and Nifty surged nearly 1% on Monday amid renewed hopes that the US Federal Reserve will start cutting interest rates soon. Traders said foreign fund inflows and buying in frontline stocks HDFC Bank and Reliance Industries also drove the markets higher.

On Friday, US Federal Reserve Chair Jerome Powell said the time had come to lower the main interest rate from a two-decade high."The time has come for policy to adjust," Powell said. "The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks."

The 30-share BSE Sensex jumped 611.90 points or 0.75 % to settle at 81,698.11. During the day, it surged 738.06 points or 0.91 % to 81,824.27.

The NSE Nifty soared 187.45 points or 0.76 % to 25,010.60. Among the 30 Sensex firms, HCL Technologies, NTPC, Bajaj Finserv, Tech Mahindra, JSW Steel, Titan, Mahindra & Mahindra, Tata Steel, Larsen & Toubro and Tata Consultancy Services were the biggest gainers.

Kotak Mahindra Bank, IndusInd Bank, Maruti and Hindustan Unilever were among the laggards.

In Asian markets, Shanghai and Hong Kong settled in the positive territory while Seoul and Tokyo ended lower.

European markets were trading mostly lower. The US markets ended with significant gains on Friday."The Fed chief Powell's clear message of the beginning of the rate cutting cycle will impart further resilience to the ongoing global rally in stock markets," V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said.

Foreign Institutional Investors (FIIs) bought equities worth Rs 1,944.48 crore on Friday, according to exchange data.

Global oil benchmark Brent crude climbed 1.08 % to USD 79.87 a barrel. Rising for the fourth straight session on Friday, the BSE benchmark ended 33.02 points or 0.04 % higher at 81,086.21. The NSE Nifty edged up 11.65 points or 0.05 % to close at 24,823.15, registering gains for the seventh session in a row.

Ajit Mishra – SVP, Research, Religare Broking Ltd noted that the markets kicked off the week on a positive note, gaining over half a percent, driven by a dovish stance from the US Fed. Mirroring other global markets, the Nifty opened strong and moved closer to its record high in the early hours. However, profit-taking in select heavyweight stocks limited further gains as the day went on. Eventually, the Nifty closed at 25,010.60, up 0.8%. All major sectors contributed to the rally, with metals, realty, and IT emerging as the top performers. The broader indices also moved higher, posting gains between 0.3% and 0.7%.

"We maintain our optimistic outlook given the favorable global cues and recommend a “buy on dips” strategy. While there has been some selective participation from the banking sector, a lack of decisiveness among major private banks is restraining the momentum. Traders should adjust their positions accordingly, with focus on stock selection", he said.

Aditya Gaggar, director of Progressive Shares highlighted that after an initial movement, the index held its gains and oscillated in a thin range to settle at 25,010.60 with gains of 187.45 points. "On a sectoral front, Metal (+2.16%) was the top performer followed by Realty (+1.76%) and IT (+1.39%) while PSU Bank (0.50%) was the major laggard. Mid and small caps also remained rangebound and underperformed the frontline index. With a strong bullish candle, the Index has filled its bearish gap zone which indicates a strong presence of bulls. The immediate hurdle is placed at the previous high of 25,078 while the downside seems to be protected at 24,870", he said.