Market sentiment was buoyed after data showed US consumer price inflation rose at a slower pace than forecast in November. The softer print strengthened expectations that the Federal Reserve could begin cutting interest rates earlier than anticipated, easing global financial conditions.
Asian markets responded positively to the development, with regional indices posting solid gains. Investors largely brushed aside concerns around policy tightening in Japan, where the central bank raised interest rates as expected to levels not seen in decades.
Broad-Based Buying Across Sectors
All major sectoral indices in India traded in positive territory, underlining the strength of the rally. Broader markets also participated, with mid-cap and small-cap stocks registering healthy gains as risk appetite improved.
Pharmaceutical stocks emerged as notable outperformers. The sector benefited from expectations that global drugmakers may further diversify supply chains away from China, a move that could favour Indian contract development and manufacturing organisations.
Financials and IT Stocks Support the Rally
Heavyweight banking and financial stocks added to benchmark gains, supported by expectations of stable domestic interest rates and improved liquidity. Information technology stocks also advanced, aided by hopes that lower US rates could revive technology spending in key overseas markets.
Analysts believe that easing global financial conditions may reduce pressure on the Indian rupee while supporting capital inflows into equities and bonds.
Foreign Investors Turn Net Buyers
Another key positive for Indian markets was the return of foreign portfolio investors as net buyers after a phase of aggressive selling earlier in the month. Provisional data showed overseas investors purchasing Indian equities for the second consecutive session.
Market experts say sustained foreign inflows could provide a cushion against global volatility, particularly if expectations of US rate cuts continue to firm up in the coming months.
Stocks in Focus
Among individual stocks, a leading asset management company made a strong market debut, listing at a sharp premium to its issue price following a large initial public offering earlier this week. The listing highlighted continued investor interest in quality financial services companies.
Infrastructure stocks also attracted attention after a major firm surged following the announcement of a large contract win through a joint venture, reinforcing optimism around India’s infrastructure growth story.
Outlook Remains Cautiously Optimistic
Market participants remain cautiously optimistic in the near term, with global inflation trends and central bank signals expected to guide sentiment. While domestic fundamentals remain supportive, analysts advise investors to remain selective amid lingering geopolitical and macroeconomic risks.
Nonetheless, the combination of easing inflationary pressures, stable domestic growth, and improving foreign investor sentiment continues to underpin the medium-term outlook for Indian equities.