India’s benchmark Nifty 50 index extended its rally for the seventh consecutive session on Thursday, notching its longest winning streak in over four months. The index closed at 25,005.5, up 0.13%, while the BSE Sensex added 0.15% to settle at 81,548.73. The sustained momentum was fueled by growing optimism around renewed US-India trade negotiations, domestic tax reforms, and expectations of a US rate cut—all of which helped offset profit-booking in select sectors like IT.
What’s Driving the Rally
The recent surge in Indian equities is being attributed to a confluence of supportive factors:
- US-India Trade Talks: Comments from US President Donald Trump about upcoming discussions with Prime Minister Narendra Modi have sparked hopes of easing trade tensions. This comes after the US imposed a 50% tariff on Indian goods last month, which had initially triggered foreign outflows and weakened the rupee.
- Domestic Tax Cuts: Recent reductions in consumption-related taxes have boosted investor sentiment, especially in consumer-facing sectors.
- Rate Cut Expectations: With US inflation data showing signs of cooling, markets are pricing in a potential rate cut by the Federal Reserve, which could improve global liquidity and benefit emerging markets like India.
- Strong Institutional Support: Domestic mutual funds and institutional investors have continued to pump money into equities, providing a cushion against global volatility.
Sectoral Snapshot
Out of the 16 major sectors, 13 logged gains, signaling broad-based optimism:
- Oil & Gas: GAIL, BPCL, HPCL, and Indian Oil led the charge, with the sector rising 1.1% on positive brokerage commentary and expectations of tariff hikes.
- Energy: Up 0.9%, driven by strength in public sector undertakings and infrastructure-linked plays.
- IT: The index fell 0.5%, snapping a two-day rally. Infosys dropped 1.5% ahead of its board meeting to consider a share buyback.
- Mid & Small Caps: Traded flat, with selective gains in pharma and logistics. Stocks like Aurobindo Pharma and Jupiter Wagons posted strong moves on deal-related news.
Currency Pressure
Despite the equity market’s strength, the Indian rupee hit a record low of ₹88.44 against the US dollar. The depreciation reflects sustained foreign outflows and the impact of punitive US tariffs. Analysts warn that currency volatility could remain a headwind if trade negotiations stall.
Market Outlook
While the Nifty and Sensex have rebounded 1.7% over the past seven sessions, they remain about 5% below their record highs set in September 2024. Analysts believe the next leg of the rally will depend on:
- Progress in US-India trade talks
- Clarity on domestic policy reforms (especially GST)
- Corporate earnings growth in H2 FY26
- Stability in global interest rates
Support for Nifty is seen near 24,930, with resistance around 25,400. Traders are advised to watch for sustained moves above 25,012 to confirm bullish continuation.
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