The S&P BSE Sensex advanced over 700 points to an intraday high of 84,932.08, while the NSE Nifty 50 rose over 200 points to a day’s high of 26,005.95. The Nifty index is now just 1% away from its all-time high of 26,277.35, while the Sensex sits 1.2% below its record peak of 85,978.25.
Here are the five factors driving Monday’s rally:
1. Hopes of Fed rate cuts
Softer-than-expected September U.S. inflation data has reinforced expectations for additional Federal Reserve rate cuts in 2025. U.S. consumer price inflation eased last month, strengthening hopes that the Fed may lower rates at its policy meetings in November and December.
Lower U.S. interest rates typically make emerging markets such as India more attractive to foreign investors.
2. U.S.-China trade negotiations progress
Optimism over easing global trade tensions also supported sentiment. Senior Chinese and U.S. economic officials have reportedly finalized the framework of a potential trade agreement for U.S. President Donald Trump and Chinese President Xi Jinping to review later this week, U.S. officials said on Sunday.“The global market construct is bullish, as seen with the Dow Jones, Nikkei, and Kospi at record highs. Sentiment remains positive,” said Dr. V.K. Vijayakumar, Chief Investment Strategist at Geojit Investments, adding that “comments from U.S. Treasury Secretary Scot Bessent that there is a ‘substantial framework for trade negotiations with China’ indicate that a U.S.-China trade deal is on the cards.”
3. Rupee strength
The Indian rupee has outperformed most of its regional peers in October, supported by the Reserve Bank of India’s consistent interventions that have helped stabilize the currency after a stretch of negative global cues.
The local unit has gained nearly 1% so far this month, though it was marginally weaker at 87.9850 per U.S. dollar on Monday. The central bank’s heavy intervention earlier this month lifted the rupee from near-record lows, with traders suggesting that the RBI now appears to be defending the currency around the 88 mark.
Beyond stabilizing the exchange rate, the RBI’s actions have allowed the rupee to outperform other Asian currencies even as the dollar strengthened this month, driven by weakness in the euro and Japanese yen amid political uncertainty.
The dollar index has risen more than 1% in October against a basket of major currencies, while the Korean won and Philippine peso have fallen about 2% and 0.7%, respectively.
Adding to the momentum, stronger foreign portfolio inflows have also supported the rupee, with overseas investors purchasing roughly $2.7 billion worth of Indian equities and bonds so far this month.
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