Share Market: India’s benchmark indices, Sensex and Nifty50, ended the day’s trade in green on Thursday, March 20, 2025. The Sensex (index with top 30 firms) surged 899.01 points to close at 76,348.06 on Thursday. Meanwhile, Nifty50 (index with top 50 firms) was up 283.05 points to close at 23,190.65 points. Among Sensex-listed companies, 27 stocks advanced, while 3 saw declines on Thursday.
The surge came after the US Federal Reserve’s decision to keep interest rates unchanged. The Fed also revised down its growth projections while raising inflation and unemployment estimates. Investors responded positively to these developments, leading to a surge in both the Sensex and Nifty indices.
Despite foreign portfolio investors (FPI) recording significant cash sales, Indian markets managed to close in the green on Monday, driven by strong domestic institutional investor (DII) activity.
Share Market: What’s Behind The Rally?
- Valuation Comfort After Downturn: The Indian equity market is witnessing buying due to valuation comfort, especially in large caps. This is on the back of recent downturn in the Indian stocks. The current PE (price-to-earnings ratio) of Nifty 50, at 20, is near its three-month low.
- Macro Stability: Macroeconomic indicators of the Indian economy have started showing green signals. This adds fuel to the rally.
- Market Expects Limited Impact From Trump Tariffs: The US President Donald Trump’s threat tariffs are certainly a concern for the Indian Market. However, investors expects it to have just a limited impact on the Indian market.
- Rupee Rising: The Indian rupee has surged to a near three-week high, gaining 10 paise to trade at 86.71 against the US dollar in early Tuesday trade. Meanwhile, the US dollar index, which measures the dollar’s strength against six major currencies, is hovering around 103.50, having declined 4.5% year-to-date. This combination of a strengthening rupee and a weakening dollar index is expected to have a positive impact on the Indian equity market.
- RBI Rate Cut Expectation: With inflation easing, there are hopes that the RBI may shift focus to supporting growth and cut benchmark policy rates significantly. RBI’s Monetary Policy Committee (MPC) is set to meet between April 7 to 9 to decide on policy rates.
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