Sensex Hits Record Highs Amid US Rate Cuts and FPI Influx

Indian stock indices soared to new highs for the fifth consecutive session as Sensex neared 86,000 points. The rise was fueled by the US Federal Reserve's rate cuts and continued investment by foreign portfolio investors (FPIs).

Stock indices in India surged further, recording new highs for the fifth straight session on Thursday. Sensex nearly hit 86,000, closing at 85,836.12 points, a gain of 666.25 points or 0.78%, while Nifty ended at 26,186.00 points, an increase of 181.85 points or 0.70%. Nifty auto and Nifty metal led the sectoral gains, rising 2.26% and 2.13% respectively.

The US Federal Reserve's recent 50 basis points cut in interest rates has provided fresh impetus to Indian stocks. Typically, lower US rates drive capital to markets with higher policy rates, like India. The steeper the rate cuts in the US, the stronger the capital influx to alternative investment destinations, including India.

Foreign portfolio investors (FPIs) continued their buying spree in Indian equities, seeking higher returns from interest rate differentials. FPIs have invested Rs 49,459 crore in India so far in September, as per NSDL data, marking the fourth consecutive month of net buying.

VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, noted, "There are no immediate triggers for a sharp market move. Although up moves might see selling by FIIs, ample domestic liquidity can absorb such selling. Investors should prioritize safety and prefer large-caps, given the overvaluation in mid and small caps." He also pointed to potential gains in Bank Nifty due to valuation comfort.

(With inputs from agencies.)