The BSE Sensex crossed the 84,000 mark for the first time on Friday, gaining 1,000 points in just eight days after touching 83,000 on September 12.
Market experts attribute this strong rally in Indian markets to heightened investor optimism, spurred by expectations of a potential rate cut by the Reserve Bank of India (RBI) in response to the U.S. Federal Reserve’s larger-than-expected rate cut.
Analysts suggest the Fed’s decision has increased liquidity flowing into emerging markets like India, where investment returns remain attractive due to higher domestic interest rates compared to the U.S.
Ajay Bagga, banking and market expert, said, “The Fed’s front-loaded jumbo rate cut is encouraging equity flows into emerging markets. While India hasn’t seen strong foreign institutional investor (FII) inflows recently, owing to ‘underweight’ ratings by several foreign brokerages due to high valuations—India’s MSCI Index is currently at a one-year forward PE of 24.7—this could change as liquidity increases.”
“A small correction could make Indian markets even more attractive, given India’s favorable macroeconomic factors, pro-growth policies, large domestic consumption, well-capitalized banks, and strong corporate earnings visibility,” he added.
Investors are also optimistic about improving economic conditions and stronger corporate earnings, driving Indian stock indices to record levels.
“Markets often tend to move ahead of actual announcements, reflecting expectations before any formal decision is made. Investors are riding this rally, driven by the possibility of lower interest rates, which would boost economic activity and corporate earnings,” said market expert Vijay Chopra,
The Nifty index also reached a new high on Friday at 25,725.60, while the Sensex peaked at 84,240.50 at the time of this report.
(With ANI input)