US Fed rate pause, slower FPI selling lift sensex by 905 pts

Mumbai experienced a significant rally in the stock market on Thursday as the US Federal Reserve decided to keep interest rates unchanged, combined with reduced selling by foreign funds. The benchmark SENSEX surged 905 points, or 1.2%, to close at 74,151, while the NIFTY index increased by 238 points, or 1.1%, reaching 22,937. Despite global crude prices hovering around $110 per barrel and the Indian rupee weakening slightly to below the 95-to-the-dollar mark, domestic markets saw a positive response.

Geojit Investments' head of research, Vinod Nair, attributed the rally to the Fed's decision to pause rate hikes, a marginal drop in crude prices, and renewed institutional buying. He noted that the domestic market showed resilience despite a challenging external environment, with continued foreign and domestic institutional support improving liquidity.

However, Nair warned that elevated Brent crude prices, a weaker rupee, rising domestic bond yields, and geopolitical uncertainty still pose risks to the market. Data from the NSDL revealed that foreign funds were net buyers in the secondary market over two sessions. Nevertheless, Thursday's trading saw some profit-taking in Jio Platforms' shares, which had made a strong debut on the bourses.