Markets gain on US Federal Reserve rate cut; trim weekly losses

Riding on the 25-bp rate cut, global risk appetite improves

Benchmark indices ended higher on Friday, helping pare weekly losses as global sentiment improved after the US Federal Reserve delivered a rate cut. The Sensex rose 450 points, or 0.5 per cent, to close at 85,268, while the Nifty advanced 148 points, or 0.6 per cent, to end at 26,047. Despite the rebound over the past two trading sessions, both indices logged a decline of 0.5 per cent this week amid persistent profit-booking at higher levels.

 

The Fed lowered its overnight lending rate by 25 basis points (bps) earlier this week but signalled a pause in further easing, saying it would “carefully assess incoming data” before considering additional adjustments. The guidance tempered expectations of a rapid global easing cycle but still buoyed risk sentiment.

 

However, currency pressures continued. Uncertainty surrounding a potential trade deal with the US, and sustained selling by foreign portfolio investors (FPIs) pushed the rupee to a fresh low of 90.56 during the session. It closed at 90.42, taking its depreciation for the year to 5.3 per cent against the dollar. FPIs have offloaded ₹1.6 trillion worth of equities so far in 2025, including ₹17,955 crore in December alone, amid weak corporate earnings and doubts over trade negotiations. 

 

Prime Minister Narendra Modi spoke with US President Donald Trump this week as India seeks relief from punitive 50 per cent tariffs imposed by Washington — another factor adding to market volatility.

 

Indian equities have grappled with sluggish earnings and trade tensions for much of the year. A rebound in recent months — aided by stronger-than-expected second-quarter results, and optimism over a potential trade breakthrough — has been repeatedly capped by profit-taking whenever indices approached record highs. A shift away from artificial intelligence (AI)-linked counters and expectations of a synchronised global easing cycle have supported the market since October.

 

“Global risk appetite improved after the US Fed rate cut, boosting liquidity optimism and lifting domestic equities despite the rupee hitting record lows and continued FPI outflows. Auto, metals, consumer durables, and realty led the gains while FMCG (fast-moving consumer goods) and public sector (PSU) banks underperformed. Broader indices are showing buying interest, bouncing back after recent consolidation,” said Vinod Nair, head of research, Geojit Financial Services.

 

Market breadth was strong, with 2,552 stocks advancing and 1,642 declining on the BSE.

 

“Nifty has decisively crossed the immediate hurdle near 25,950, corresponding to the 20-DEMA (double exponential moving average). Sustaining above this level will be crucial for extending the recovery and inching towards the record high again. We continue to advocate a stock-specific trading approach, with preference for banking, auto, metal, and pharma pockets while selectively exploring opportunities in other sectors,” said Ajit Mishra, senior vice president-research, Religare Broking.

 

Among Sensex constituents, Bharti Airtel rose 1.5 per cent and contributed the most to the index’s gains, followed by Larsen & Toubro, which advanced 1.7 per cent. FMCG major Hindustan Unilever and ITC fell 1.9 per cent and 0.6 per cent, respectively, and were the biggest drag on the market performance.