Indian equity markets kicked off the week on a strong note, buoyed by gains in IT, metal, and auto stocks, as global sentiment improved on expectations of a U.S. interest rate cut. The rally came despite lingering concerns over possible American tariffs on Indian exports.
The BSE Sensex rose 418.81 points, or 0.52%, to close at 81,018.72, while the NSE Nifty gained 157.40 points, or 0.64%, ending at 24,722.75.
Sectoral and Stock Highlights
The metal index led sectoral gains with a 2.5% surge, aided by a weaker U.S. dollar which made commodities more attractive for overseas buyers.
IT stocks climbed 1.6%, supported by hopes that the U.S. Federal Reserve may cut rates in September after data showed weaker-than-expected job additions in July and downward revisions for prior months. Market expectations for a rate cut next month jumped to 80% from 63% a week ago, pushing up Indian IT counters that earn a bulk of their revenue from the U.S.
Auto stocks also rallied 1.6%, led by Hero MotoCorp and TVS Motor, which gained 5% and 2.9% respectively after posting strong July sales figures.
Among individual performers, UPL surged 7% on the back of strong Q1 numbers with improved volumes and margins. Multi Commodity Exchange of India (MCX) rose 5% after reporting robust earnings and announcing a stock split.
The midcap and smallcap indices also participated in the rally, climbing 1.4% and 1.3% respectively, reflecting broad-based buying.
Market Outlook
Ajit Mishra, SVP – Research at Religare Broking, cautioned investors not to read too much into a single-day rebound. “A decisive break above 24,800 could trigger further upside toward the 25,000 mark, which acts as the next key resistance,” he said. “Conversely, a close below 24,600 would indicate a resumption of the corrective phase.”
Global Markets
Asian stocks edged higher, tracking rising expectations of U.S. rate cuts. MSCI’s Asia-Pacific index (excluding Japan) rose 0.7%, led by a 1.1% gain in South Korea. However, Japan’s Nikkei lost 1.4% as the yen strengthened, and Chinese blue chips remained largely flat.
Futures on major global indices also signaled optimism: S&P 500 and Nasdaq futures were up 0.4% each, EUROSTOXX 50 gained 0.6%, FTSE 100 climbed 0.5%, and Germany’s DAX was up 0.4%.
Meanwhile, U.S. Treasury yields edged lower, further reinforcing expectations of a rate cut. According to Reuters, Fed funds futures now price in an 85% chance of easing in September and suggest around 100 basis points of rate reductions over the next year.
Currency and Commodities
The Indian rupee continued to weaken, closing at 87.6550 against the U.S. dollar, compared to 87.5400 on Friday. Traders attributed the fall to persistent foreign fund outflows and steady dollar demand from importers, especially oil companies.
The dollar index fell 0.27% to 98.92, supporting emerging market currencies and commodities.
In commodities, gold held steady at $3,357 per ounce after a 2% gain in the previous session, while crude prices slipped following an OPEC+ announcement of a planned output hike in September. Brent crude was down 1.2% at $68.82 per barrel, and WTI also dropped 1.2% to $66.51.
