Indian equities surge as Sensex climbs over 900 points on Fed rate hold and foreign buying
The Sensex rose more than 900 points and the Nifty crossed 22,900 after the U.S. Federal Reserve left rates unchanged, boosted by foreign inflows and hopes of a long-term capital gains tax cut.
Indian stock markets posted strong gains on Thursday, with the Sensex advancing over 900 points to above 74,129 and the Nifty 50 climbing close to 22,900. The rally followed the Federal Reserve’s decision to keep its policy rate unchanged, a move that lifted investor sentiment across major indices, including small-cap and mid-cap segments.
Foreign institutional investors were net buyers of Indian shares, purchasing roughly Rs 872 crore on Wednesday, according to provisional NSE data. The buying followed earlier weeks of modest inflows, though analysts say a sustained trend reversal remains uncertain.
Market participants also cited growing optimism about a possible reduction in India’s long-term capital gains tax, after Finance Minister Nirmala Sitharaman indicated that discussions on the tax and securities transaction tax were ongoing. Jefferies analysts suggested that any cut could encourage foreign investors to increase exposure to large-cap banks, energy firms and other sectors.
The rupee edged higher, trading at 95.17 per U.S. dollar, as the dollar eased after the Fed announcement. Commodity analyst Kaveri More noted that the rupee may consolidate around the 95-per-dollar level, supported by a softer dollar and lower Treasury yields, though higher crude prices could pose downside risks.
U.S. Treasury yields fell, with the 10-year benchmark slipping below 5%, reducing the relative appeal of bonds and further supporting equities. Analysts highlighted that valuations have become more attractive after the recent sell-off, with several sectors showing reasonable multiples.
"We see value in more parts of the market, as valuations have come off sharply across sectors and stocks," said a Kotak Institutional Equities representative.
Despite the upbeat tone, some strategists warned that broader macro pressures, including elevated crude prices and a potential Fed rate hike in December, could keep volatility elevated, especially ahead of the upcoming options expiry.
Technical outlooks suggested the Nifty could trade within a range of 22,500 to 22,840 in the near term, with upside potential toward 23,600 if the index holds above 22,660.