India’s Nifty 50 Rises as Fed Rate Cut Hopes Lift Market

Post by : Saif Nasser

India’s stock market saw a welcome rebound on Friday, as the Nifty 50 snapped a four-session losing streak, supported by positive cues from Asian markets and hopes for a U.S. Federal Reserve rate cut next year.

The Nifty 50 rose 0.58% to 25,966.4, while the BSE Sensex gained 0.53% to 84,929.36. Despite the gains, both indices fell for the week by 0.3% and 0.4%, as concerns over the falling rupee and foreign fund outflows continued to weigh on investor sentiment.

Among the 16 major sectors, ten ended the week lower, while mid-cap and small-cap stocks remained mostly unchanged. Analysts suggest that foreign investor buying and a stabilizing rupee could help support markets going forward. Anita Gandhi, head of institutional business at Arihant Capital Markets, said, “The worst seems to be behind with foreign investors turning buyers and the rupee stabilizing. Investors now need to watch if any yen carry trade unwinding occurs after the Bank of Japan’s rate hike.”

Foreign investors had been buying Indian shares for two consecutive sessions before Friday, while the rupee strengthened for a third straight session. On the global front, the Bank of Japan raised interest rates to levels not seen in three decades and hinted at further hikes. Meanwhile, U.S. inflation data for November came in below forecasts, with consumer prices rising 2.7% year-on-year. This raised hopes that the Federal Reserve may lower interest rates, making emerging markets like India more attractive for foreign investment.

Lower U.S. interest rates generally encourage investors to move funds into emerging markets, as Treasury yields fall and the dollar weakens. This trend helped lift Asian markets by 0.7% on Friday.

On the company level, several stocks showed strong gains. Reliance Industries rose 1.3% after its unit acquired a majority stake in the heritage nutrition brand Udhaiyam. Shriram Finance jumped 3.7% to a record high after Japan’s MUFG announced plans to acquire a 20% stake in the non-bank lender for $4.4 billion. Groww soared 11.6% after receiving a “buy” rating from Jefferies. ICICI Prudential Asset Management also had a strong debut, closing 19.4% higher after its $1.2 billion initial public offering earlier this week.

Investors will continue to monitor global economic data, especially from the U.S., along with domestic currency trends and foreign portfolio flows, to gauge the direction of India’s markets in the coming weeks.