CHENNAI: Indian equity markets closed higher on Thursday, supported by gains in technology and financial stocks after the US Federal Reserve announced its first rate cut of 2025. The move boosted sentiment across Asian markets, while investors now turn their attention to how Western markets will react when trading begins.
The Sensex and Nifty 50 ended the day with gains of nearly half a percent each, led by strong advances in IT companies, which benefit from an improved global demand outlook and a softer dollar. Mid-cap and small-cap shares also participated in the uptrend, though more modestly.
The rupee strengthened against the US dollar on expectations of further capital inflows following the Fed’s policy shift. However, traders remained cautious, with mixed signals from the Fed about the pace of future rate cuts keeping currency and bond markets volatile.
On the regulatory front, India’s market regulator recently eased foreign investor entry rules and reduced the minimum IPO size, a move expected to deepen market liquidity. At the same time, data showed promoters and insiders have been heavy sellers of shares so far in 2025, pointing to underlying caution despite near-term market optimism.
Globally, the Fed’s decision is expected to provide support to equities, particularly in Europe and the US, where futures were trading with mild gains ahead of the opening bell. Analysts expect growth-oriented sectors such as technology and consumer discretionary to benefit most, while defensive sectors may lag.
European indices are likely to open higher on Thursday, tracking Asian gains and supported by a weaker dollar. However, investors will be closely watching inflation readings and upcoming central bank meetings for clues on the policy outlook. In the U.S., futures suggested a positive but measured start, with markets balancing optimism over lower borrowing costs against uncertainty about the Fed’s next moves.
Commodities also remained firm, with gold holding near recent highs as investors continued to seek a hedge against inflation and geopolitical risk. Oil prices were steady, supported by supply constraints and improving demand signals.
Looking ahead, the trajectory of Western markets will depend on incoming economic data and currency movements. While Thursday’s sentiment is broadly positive, analysts caution that profit-taking and volatility could emerge as investors reassess valuations and the likelihood of additional rate cuts.