Sensex, Nifty gain for third day as trade deal, Fed hopes lift mood

Indian markets rallied for a third session on optimism over a potential US-India trade deal and expectations of a Federal Reserve rate cut, with tech stocks leading the gains

Indian equity benchmarks extended their winning streak for a third session on Wednesday. This was driven by optimism over a potential US–India trade deal and heightened expectations of a US Federal Reserve (Fed) rate cut next month. 

The Sensex ended 585 points, or 0.7 per cent, higher at 84,467, while the Nifty advanced 181 points, or 0.7 per cent, to 25,876. The combined market capitalisation (mcap) of BSE-listed firms rose by ₹4.75 trillion to ₹474 trillion. 

Equities have been gaining steadily since October, supported by strong corporate earnings. It is also on hopes that the proposed trade agreement could sharply reduce tariffs — from about 50 per cent to 15–16 per cent — on select goods, between the two countries. 

 

Technology stocks led Wednesday’s rally, with the Nifty IT index climbing 2 per cent, taking its three-day gain to 5 per cent.

 

The sector benefited from renewed optimism on US policy after President Donald Trump signalled support for skilled foreign workers, easing concerns over visa restrictions.

 

Hopes of an end to the US government shutdown further bolstered sentiment.

 

“The up move was supported by the US softening its stance on trade tariffs with India. Additionally, steady Q2 earnings, exit polls in Bihar indicating a National Democratic Alliance (NDA) victory, and record systematic investment plan (SIP) inflows buoyed investor sentiment,” said Siddhartha Khemka, head of research, wealth management, Motilal Oswal Financial Services.

 

He added, “We expect markets to maintain a positive bias, supported by the ongoing earnings season, progress on the trade deal, and improving global cues.”

 

Market breadth remained positive, with 2,447 stocks advancing against 1,764 declining.

 

“Going ahead, the 25,760–25,730 zone will act as immediate support for the Nifty. A break below 25,730 could trigger profit-booking towards 25,560. On the upside, resistance lies at 26,000–26,030. And, a sustained move above this range could open the door to 26,180 in the near term,” said Sudeep Shah, head – technical and derivatives research, SBI Securities.

 

Among Sensex stocks, Asian Paints was the top gainer, rising 4.5 per cent, followed by Tech Mahindra, which added 3.4 per cent.

 

Foreign portfolio investors (FPIs) sold shares worth Rs 1,750 crore on Wednesday, while domestic institutions pumped in Rs 5,127 crore.

 

The latest gains come amid foreign brokerages such as HSBC and Goldman Sachs turning overweight on India.

 

“India’s year-to-date underperformance of 27 percentage points against emerging markets (EMs), largest in two decades, was triggered by a mix of peak starting valuations and cyclical growth slowdown. This led us to downgrade our view on India in October last year. We now see a case for India to perform better next year, with growth-supportive policies, earnings revival and defensible valuations,” said a note by Goldman Sachs.

 

The US brokerage has upgraded the domestic market to 'overweight' and set a Nifty target of 29,000.

 

“We see India as a useful artificial intelligence (AI) hedge and a source of diversification for those uncomfortable with the AI frenzy,” said Herald van der Linde, head of equity strategy for Asia-Pacific at HSBC. He added that foreign inflows to India are likely to pick up in the coming months.