Sensex, Nifty Rebound: Fed Rate Cut Hopes Fuel IT Sector Rally
BIZ DESK
Domestic equities began the week on a firm footing Monday, supported by upbeat global cues and renewed buying interest in IT majors. The benchmark Sensex rose 329.05 points, or 0.40 per cent, to close at 81,635.91, while the Nifty advanced 97.65 points, or 0.39 per cent, to settle at 24,967.75. Gains, however, were capped by profit-booking at higher levels.
Ajit Mishra, SVP–Research, Religare Broking, said markets staged a steady recovery after an initial dip. “Strong traction in IT stocks and resilience in heavyweights provided support, though broader markets remained muted, closing almost flat and reflecting caution,” he observed.
Investor sentiment was lifted by easing concerns over global interest rates, following signals from the U.S. Federal Reserve of a possible rate cut next month. Softening crude oil prices and steady institutional inflows also added comfort.
Vinod Nair, Head of Research at Geojit Financial Services, highlighted that domestic factors remain constructive. “The proposed GST rationalisation is expected to boost consumption, and a healthy monsoon could act as a buffer against uncertainties in the global trade environment,” he said.
Sectoral Trends
- IT:
IT majors led the rally, with Infosys, TCS, and Wipro posting strong gains amid expectations of improving global demand and better margins. The sector benefited from easing dollar strength and upbeat commentary from global peers. - Banking & Financials:
Banking shares traded mixed. Private banks witnessed selective buying, while PSU banks faced pressure from profit-booking after recent gains. NBFCs remained steady as softening bond yields supported sentiment. - Auto:
Auto stocks slipped marginally on concerns of higher inventory levels, though two-wheeler makers found some support from festive demand expectations and forecasts of a strong monsoon aiding rural sales. - FMCG:
FMCG stocks remained range-bound. Analysts said that optimism over GST rationalisation and rural demand revival may support the sector in coming weeks. - Energy & Oil & Gas:
Energy shares traded flat as investors weighed declining crude oil prices against subdued refining margins. ONGC and Reliance saw muted moves despite global softness in oil benchmarks. - Metals & Realty:
Metals were weak on concerns over slowing Chinese demand. Realty stocks also saw profit-taking after last week’s rally, with investors turning cautious ahead of key project launches.
Market Drivers
- Fed Signals: Comments hinting at a likely September rate cut by the U.S. Federal Reserve lifted sentiment across global markets.
- Domestic Tailwinds: GST rationalisation proposals and prospects of a strong monsoon were viewed as positives for consumption-linked sectors.
- Flows: Continued foreign portfolio inflows and lower crude oil prices provided a supportive backdrop, though caution persisted in mid- and small-cap counters.
