Indian Stock Indices Surge on Renewed FPI Interest, US Fed Signals Rate Cuts

Indian stock indices ended the week on a high, buoyed by foreign portfolio investments and signals of imminent rate cuts by the US Federal Reserve. Sensex and Nifty touched new record highs, driven by gains in pharma, realty, and healthcare sectors.

Indian stock indices concluded the week's trade on a high note, maintaining gains accumulated throughout the trading day. The surge was supported by consistent buying from foreign portfolio investors (FPIs), according to recent data from the National Securities Depository Limited, marking a shift from their previous selling trend.

Both key indices, Sensex and Nifty, touched record highs early in the session. However, they pared some gains later, each closing 0.3% higher at 82,365.77 points and 25,235.90 points respectively, just below their peak levels. Sectoral indices for pharma, realty, and healthcare led today's market movers.

"US Federal Reserve Chair Jerome Powell's remarks at the Jackson Hole Symposium, signaling imminent rate cuts and increased confidence in a soft economic landing, bolstered emerging markets including India," stated Shrikant Chouhan, Head of Equity Research at Kotak Securities. "FPI flows are expected to remain volatile," he added.

Jerome Powell indicated that the US central bank is poised to reduce interest rates as inflation aligns with targets. Speaking at Jackson Hole, Powell noted that "the time has come for policy to adjust," though he did not specify the extent of potential rate cuts.

Potential rate reductions in the US could make investments in emerging markets, such as India, more attractive. "Global markets are currently buoyant, anticipating the US Fed's rate cut in September. Both US and Indian markets have reclaimed recent highs, reflecting ongoing optimism," commented Vinod Nair, Head of Research at Geojit Financial Services.

Looking ahead, market reactions will hinge on the Q1 GDP data scheduled for release later today. The Reserve Bank of India, in its latest monetary policy meeting, projected GDP growth for 2024-25 at 7.2%, with quarterly growth estimates ranging between 7.1% and 7.3%.

India's GDP grew by 8.2% during the fiscal year 2023-24, maintaining its position as the fastest-growing major economy. GDP grew by 7.2% in 2022-23 and 8.7% in 2021-22, government data showed. The Economic Survey presented in Parliament last month conservatively forecasted India's real GDP growth at 6.5-7% for 2024-25, acknowledging higher market expectations. Real GDP growth is adjusted for inflation. (ANI)

(With inputs from agencies.)