Sensex And Nifty Hit All-Time High: Why Markets Are Rising

India's stock benchmarks opened higher on Thursday, shy of record highs, on growing expectations of US and domestic interest rate cuts next month. Equity markets advanced, with the Sensex rising 253 points to 85,863, nearing its September 2024 peak of 85,978. The Nifty50 gained 65 points to 26,270, extending the rally seen earlier this week.

Bharti Airtel, ICICI Bank, and Reliance Industries led the gains. Investor sentiment was supported by expectations of potential rate cuts by both the US Federal Reserve and the Reserve Bank of India. Domestic rate-sensitive sectors, including banks, automobiles, and real estate, recorded strong buying ahead of the RBI's upcoming policy review.

Why Markets Hit An All Time High

• Rate-Cut Expectations: Markets are rising on expectations that both the US Federal Reserve and the Reserve Bank of India may cut interest rates next month. Lower rates reduce borrowing costs and encourage investment in stocks.
• Falling Crude Prices: Softer crude oil prices have eased inflation, which helps companies save costs and supports consumer spending. This has added to positive market sentiment.
• Investment Flows: Foreign investors are returning to India, while domestic investors continue buying through mutual funds and SIPs. These inflows have helped push the markets higher.
• Better Corporate Earnings: Recent earnings reports from major companies have been positive. Combined with reasonable stock valuations, this has attracted more buyers.
• Broad Sector Gains: Banks, automobiles, real estate, and other sectors have all contributed to the rally, showing that confidence is spreading beyond just a few big companies.
• Strong Performance Of Large Companies: Heavyweight stocks such as HDFC Bank, ICICI Bank, and Reliance Industries saw gains of around 1 per cent each. Because these companies have a large weight on the indices, their performance lifts the broader market.
• Global Market Optimism: Positive sentiment in other Asian markets, including Japan and South Korea, along with gains on Wall Street, helped lift Indian markets. Expectations of easing trade tensions and geopolitical risks contributed to investor optimism.