Equities rise as softer US inflation fuels Federal Reserve rate-cut hopes

The US consumer price index rose 2.7 per cent year-on-year in November, below expectations of a 3.1 per cent jump

Indian equities gained, with the benchmark indices snapping their four-session losing streak on Friday, as soft US inflation data raised hopes of further Federal Reserve rate cuts. The Sensex  ended the session at 84,929, a gain of 448 points or 0.5 per cent. Nifty50, meanwhile, ended at 25,966, a gain of 151 points or 0.6 per cent. For the week, the Sensex declined by 0.4 per cent, while Nifty was down by 0.3 per cent. Total market capitalisation of BSE-listed firms rose by ₹5 trillion to ₹471 trillion.

 

The US consumer price index rose 2.7 per cent year-on-year in November, compared to expectations of a 3.1 per cent jump. The lower-than-expected consumer price rise has raised expectations of a Fed rate cut. US rate cuts make emerging markets like India more attractive to foreign portfolio investors (FPIs). FPIs on Friday were net buyers to the tune of ₹1,831 crore, while domestic institutions were net buyers to the tune of ₹5,723 crore. So far, FPIs have been net sellers to the tune of ₹1.57 trillion.

 

 

“Investors now look for signals on the Fed’s 2026 easing trajectory. Meanwhile, the BoJ raised its policy rate by 25 bps to a three-decade high, a move that could reshape global liquidity trends. Domestically, strong global cues and bargain hunting lifted indices, with large-cap stocks leading gains. Oil prices continued to soften on oversupply concerns and a subdued growth outlook. While sentiment remains constructive, near-term volatility may persist amid uncertainty over trade deal timelines and upcoming macro data releases,” said Vinod Nair, head of research at Geojit Investments.

 

The rupee closed at 89.29 on Friday after hitting record lows this week. Weakness in the rupee has put pressure on equities this week. Market breadth was strong, with 2,652 stocks advancing and 1,531 declining.

 

“Going ahead, for Nifty, the previous swing high zone of 26,050-26,100 will act as important resistance. Any sustained move above the 26,100 level could trigger a pullback up to the 26,300 level, followed by 26,500. On the downside, the 50-day EMA zone of 25,800-25,750 will act as a crucial support for the index,” Sudeep Shah, head of  technical and derivatives research at SBI Securities.