Sensex, Nifty Rally as Fed Rate-Cut Hopes Ignite Investor Optimism
Market watchers believe that Powell’s indication that employment risks may outweigh inflationary pressures has significantly lifted investor sentiment.
Indian benchmark indices extended their early-week momentum into the mid-morning session on Monday, August 25, buoyed by renewed confidence after U.S. Federal Reserve Chair Jerome Powell’s dovish remarks at the Jackson Hole Symposium stoked expectations of a September rate cut.
By 10:30 a.m. IST, the Sensex had climbed to 81,492, up 185 points, maintaining its upbeat trajectory, while the Nifty neared the 24,921, up 51 points, but still below the 25,000 mark. Markets continued to broaden their gains, with mid-caps and small-caps also advancing, signaling robust participation across the board.
Market watchers believe that Powell’s indication that employment risks may outweigh inflationary pressures has significantly lifted investor sentiment, effectively raising the probability of a rate cut in September from roughly 75% to as high as 84%. This shift is seen as particularly encouraging for emerging markets like India, which stand to benefit from increased foreign flows and softer global financing conditions.
Sectorally, the IT space has emerged as a clear winner, with stocks rallying sharply—some up nearly 2.5%—driven by the outlook of a rejuvenated tech spend environment in the U.S. Real estate and metals also exhibited strength, each gaining about 1%, reflecting a broader cyclical upturn.
Additionally, financial markets remain attentive to domestic developments: Yes Bank shares climbed after news that Sumitomo Mitsui secured regulatory approval to acquire up to 24.99% of the bank.
Meanwhile, amidst this broader rally, specific corporate narratives are advancing quietly. Mazagon Dock Shipbuilders is expected to begin cost negotiations for a substantial Rs 70,000-crore submarine construction project with Thyssenkrupp Marine—a prospect seen as a promising development for India’s defense manufacturing ambitions. Syrma SGS Technology is regaining investor attention following the expiration of a shareholder lock-in covering around 20% of its equity—an event that could reinvigorate trading interest in the stock.
Technically, analysts note that the Nifty is holding firm above its support near 24,800, though upside momentum remains capped unless it convincingly breaches 25,150. Similarly, the Bank Nifty is clinging to support around 55,000, with any decisive move above 56,150 needed to shift sentiment from cautious to bullish. The current pattern suggests a “sell on rise” strategy remains prudent, though broader optimism tempers aggressive bearish bets.
In summary, investors believe that Powell’s forward-leaning commentary has tipped the scales in favor of risk assets, reinforcing expectations of easier U.S. monetary policy ahead. This environment is likely to sustain momentum in Indian equities, particularly in sectors closely tied to global demand like IT, metals, and real estate. As always, upcoming data on U.S. jobs, inflation, and U.S.–India trade developments—including looming tariff risks—remain crucial variables to watch as the rally unfolds.
Monday’s action illustrates a renewed sense of optimism—markets appear ready to build on early gains and seize the potential windfall from dovish global central bank signals and domestic corporate catalysts.