Sensex up over 250 pts, Nifty50 above 24,800 on GST relief, Fed rate cut bets

Indian benchmark indices Sensex and Nifty opened higher on Monday, on sustained optimism after the GST Council’s sweeping tax cuts, while weak U.S. labour data bolstered expectations of a Federal Reserve rate cut.The S&P BSE Sensex rose 160.81 points, or 0.20%, at the open to 80,871.57, while the NSE Nifty 50 advanced 49.95 points, or 0.20%, to 24,790.95. At 9:35 AM, Sensex traded 253 or 0.31% higher at 80,964 whereas Nifty50 rose 83 pts of 0.34% to 24,824. On the 30-share Sensex, Tata Steel, Mahindra & Mahindra, Tata Motors, Adani Ports and NTPC led the advance, rising between 0.7% and 2.2%.

Across sectors, the Nifty Auto index gained 0.45%, FMCG edged up 0.07%, IT added 0.31%, Metal climbed 0.42%, and PSU Bank rose 0.28%.

The Sensex and Nifty had advanced 1.1% and 1.3%, respectively, last week after the GST Council cut levies on everyday goods to spur consumption.

Broader markets also firmed Monday, with both mid-cap and small-cap indices up about 0.3%.

Expert views

Markets are likely to remain sensitive to global trade headlines, according to Dr. V.K. Vijayakumar, Chief Investment Strategist at Geojit Investments, who said that “the heightened uncertainty surrounding the U.S.-India trade relations will continue to weigh on markets. President Trump’s recent statements regarding the ‘special U.S.-India ties’ and that ‘there is nothing to worry’ indicate improvement in the strained relationship. However, Trump’s comments on a second round of sanctions against Russia and Peter Navarro’s continuing tirade against India are negative factors.”

Vijayakumar said that speculation over possible curbs on India’s IT exports, despite services trade so far escaping reciprocal tariffs, could also unsettle investors. “These concerns will continue to influence the market which got a morale boost from the GST reforms. The euphoria from GST reform was short-lived since the market had already partly discounted the GST rate cuts. Post-September 22nd, when the new GST rates come into effect, there will be huge spurt in demand, particularly for automobiles and consumer durables. This has the potential to lift the market sentiments.”

The Nifty’s near-term trajectory remains finely balanced, said Anand James, Chief Market Strategist at Geojit Investments. James observed that “the turn lower last week, from the 50-day SMA, appeared to signal that the recovery push may be over. But, the close above the 20-day SMA on Friday, after the initial scare, suggests that there is enough risk appetite to push higher.”

James noted that confirmation would come only if the index moves past 24,870 to target levels beyond 25,400. “Alternatively, inability to close above 24,700 or a direct fall again below 24,500 could re-expose 24,075, the 200-day SMA, as well as the Fibonacci extension target of 23,860,” he said, while adding that such an outcome looks less likely given the muted VIX, which declined steadily last week to end near 10.78 on Friday.

Global Markets

Global equities edged higher Monday after weak U.S. labour data reinforced expectations the Federal Reserve will cut interest rates this month.

MSCI’s broadest gauge of Asia-Pacific shares outside Japan rose 0.4%. In early trading, blue-chip Chinese stocks gained 0.3% and Hong Kong’s Hang Seng added 0.35%.

The prospect of easier Fed policy buoyed stocks while pressuring Treasury yields and the dollar. S&P 500 futures were up 0.19% in Asian hours, following a choppy Friday session in which the index touched a record before closing 0.3% lower. European futures advanced 0.45%.

Traders have fully priced in a quarter-point cut at the Fed’s meeting this month, with about an 8% chance of a half-point move, according to CME’s FedWatch tool. Markets are also expecting roughly 68 basis points of easing by year-end, Reuters reported.

In commodities, gold hovered at $3,588 an ounce, just shy of the $3,600 mark. The metal has gained 37% so far this year after a 27% rise in 2024.

FII/DII Tracker

On the institutional front, Foreign Institutional Investors (FIIs) sold equities worth Rs 1,305 crore on September 5, while Domestic Institutional Investors (DIIs) were net buyers to the tune of Rs 1,821 crore.

Crude Impact

Oil prices rose more than 1% on Monday, recovering part of last week’s losses, as the threat of tighter sanctions on Russian crude following an overnight strike on Ukraine outweighed OPEC+ plans to boost supply.

Brent crude advanced 80 cents, or 1.2%, to $66.30 a barrel by 3:45 a.m. GMT, while U.S. West Texas Intermediate gained 75 cents, or 1.2%, to $62.62.

More to come....