Indian shares bounce back on easing US rate concerns, eyes on Middle East

Indian shares experienced a strong rebound on Tuesday, following the positive trend in global stocks and alleviating concerns over U.S. interest rates. The NSE Nifty 50 index closed 0.91% higher at 19,689.85, while the S&P BSE Sensex rose 0.87% to 66,079.36. Financials and banks, which hold significant weightage, recorded gains of over 1%, while public sector banks rebounded by 2.08% after a previous session’s loss. The realty index surged by an impressive 4.01%, reaching a record high, driven by robust business updates from key constituents and the Reserve Bank of India’s decision to maintain rates unchanged.

Automobile stocks also contributed to the positive sentiment, with the Nifty Auto index rising by 1.24%. Tata Motors, in particular, witnessed a 2.14% increase after CLSA projected a rise in its fiscal 2025 profit. The small-cap and mid-cap indexes outperformed the blue-chip stocks, each rising by more than 1.2%. Market experts believe that this outperformance could continue as September quarter earnings are expected to be strong, supported by robust macroeconomic fundamentals and festive demand.

The International Monetary Fund (IMF) revised India’s economic growth forecast for the fiscal year to 6.3% from the previous estimate of 6.1%, citing stronger-than-expected consumption. This positive outlook further bolstered investor confidence in the Indian market. However, concerns arose due to the military clashes between Israel and Hamas, leading to increased demand for safe-haven assets like gold and the U.S. dollar. Analysts warned that if the conflict escalates and involves major players such as the U.S. and Iran, it could disrupt oil supplies and create market volatility.

Fortunately, dovish comments from Federal Reserve officials helped ease U.S. Treasury yields, triggering a recovery in global markets. Amidst this backdrop, several individual stocks stood out. Adani Ports experienced a notable 3.73% increase, driven by bullish views from CLSA and Motilal Oswal. Coal India also surged by 5.37% after Nuvama raised earnings estimates, highlighting an upbeat volume growth outlook.

Overall, the Indian stock market showcased resilience and regained momentum, driven by positive global cues and strong domestic factors. With the IMF’s improved growth forecast and expectations of robust earnings, investors remain optimistic about the future prospects of Indian equities.