Indian Stocks Hit New Highs as US Rate Cut, China Stimulus Fuel Rally

Indian stock markets extended their remarkable rally for a fourth consecutive session on Tuesday, surging to new all-time highs. The benchmark Nifty 50 and S&P BSE Sensex both touched unprecedented levels, driven by a combination of positive global cues and domestic factors.

Investor sentiment received a significant boost from last week’s decision by the US Federal Reserve to implement a substantial 50-basis point interest rate cut. This move, coupled with new stimulus measures announced by China, fueled a surge in global risk appetite, propelling Indian equities higher.

The Nifty metal and Nifty energy indices emerged as the top performers, surging 2.3% and 0.8% respectively, as investors cheered China’s latest efforts to bolster its slowing economy. The Chinese government announced a range of measures, including a cut to bank reserve requirements and a reduction in mortgage rates, aimed at stimulating growth and boosting demand for commodities.

“Any sign of stimulus from China is viewed favorably by commodity-linked companies in India,” explained Samrat Dasgupta, CEO of Esquire Capital Investment Advisors. A slowdown in the Chinese economy often leads to increased exports of metals and other raw materials, putting downward pressure on global commodity prices.

However, not all sectors participated in the rally. Information technology and consumer goods stocks faced selling pressure, with their respective indices declining by 0.6% and 0.3%.

Among individual stocks, Reliance Power stole the show, surging by the maximum permissible limit of 5%. The company’s plans to raise capital through a share sale, aimed at reducing debt and funding expansion, were well-received by investors. AstraZeneca Pharma India also witnessed a significant jump, soaring nearly 11% after receiving approval from the Indian government to import Durvalumab, a crucial drug used in the treatment of liver and gall bladder cancers.

The ongoing rally in Indian equities reflects a confluence of positive factors, including favorable global liquidity conditions, easing monetary policy in major economies, and a gradual recovery in domestic economic activity. However, investors will be closely monitoring upcoming corporate earnings reports and macroeconomic data releases for clues about the sustainability of this impressive market performance.thumb_upthumb_down