US-China thaw, US Federal Reserve rate cut hope lift stock markets

FPIs back in buying mode as global cues turn favourable

Indian equity benchmarks advanced on Monday amid optimism over a potential trade deal between the US and China. Expectations of a rate cut by the US Federal Reserve (Fed) at its policy meeting this week also buoyed up sentiment.

 

The Sensex gained 567 points, or 0.7 per cent, to close at 84,779 after rising as much as 720 points intraday. The Nifty ended 171 points, or 0.7 per cent, higher at 25,966. The Sensex is now 1.2 per cent, and the Nifty 0.95 per cent, away from their all-time closing highs.

 

The total market capitalisation of BSE-listed companies rose by ₹3 trillion to ₹472 trillion.

 

 

Investor sentiment strengthened following reports that US and Chinese officials had discussed a broad framework for a trade pact. According to media reports, US President Donald Trump and China’s Xi Jinping are expected to meet on Thursday on the sidelines of the APEC CEO Summit Korea 2025 in Gyeongju, South Korea, to finalise the deal. 

 

Meanwhile, weaker-than-expected US inflation data raised hopes of a Fed rate cut this week. The US Consumer Price Index rose 0.3 per cent in September, after a 0.4 per cent increase in August. Softer inflation bolsters the case for lower interest rates, which typically boost flows into emerging markets such as India.

 

Foreign portfolio investors (FPIs) have turned net buyers in October after three months of selling. 

 

“Investors will closely track India’s industrial production and US consumer confidence data due on Tuesday. With the earnings season in full swing, markets are likely to see sector- and stock-specific moves in response to quarterly results and management commentary. Overall, we expect a gradual upmove driven by strong global cues, renewed foreign institutional investor buying, and expectations of healthy corporate earnings,” said Siddhartha Khemka, head of retail research, Motilal Oswal Financial Services.

 

Robust quarterly updates from several companies have aided recent gains, though uncertainty over the US–China deal and rich valuations continue to trigger profit-taking at higher levels.

 

A report last week suggested that the US may lower tariffs on Indian exports to 15–16 per cent from the current 50 per cent. A prospective trade deal between the two countries could provide fresh momentum to the ongoing rally.

 

“Technically, the Nifty has built a firm base above 25,700. Its sustained position above the 10- and 20-day exponential moving averages indicates strong underlying support. Every minor dip is being actively bought, suggesting continued accumulation by market participants. The 25,750–25,650 zone remains a crucial ‘buy-on-dips’ pocket,” said Dhupesh Dhameja, derivatives research analyst at Samco Securities.

 

Market breadth was slightly negative, with 2,198 stocks declining and 2,099 advancing on the BSE.