Stock Market Surges Ahead of FOMC Minutes On 19 February 2025: Why Sensex, Nifty Are Rising?

Stock Market Update: The Indian stock market gained momentum in the second half of Wednesday's trading session after a volatile opening bell. Sensex crossed the 76,300 mark, and Nifty 50 reached near 23,050 levels. Domestic equities shot up, tracking a strong rally of Wall Street overnight. The majority of sectoral indices witnessed a buying sentiment with the exception of tech and pharma stocks. However, for the sustainability of bulls in Indian equities, there is a need for FIIs to turn buyers who have continued on relentless selling since the start of 2025.

Sensex, Nifty:

Sensex surged by as much as 371 points to hit an intraday high of 76,338.58. Stocks like Zomato, LT, Axis Bank, Tata Steel and NTPC were top gainers. On the other hand, TCS, HUL, Bharti Airtel, Infosys and M&M were top laggards.

Meanwhile, Nifty 50 surged by nearly 105 points to hit an intraday high of 23,049.95. Bank Nifty surged by nearly 1%. India's volatility index slipped by 2%. The Nifty Midcap 100 index zoomed by 1.5%, while the Nifty Smallcap 100 index outperformed with upside of 2.5%.

Nifty PSU Bank was up 1.5%, while Nifty Metal and Media indexes were higher 1.4% and 1.2%. Nifty Realty skyrocketed by 2%. However, pharma and IT stocks were top laggards, while FMCG indices faced volatility.

Explaining the performance, Trading Economics data said, "Metals, banking, and realty primarily drove the index, while tech sectors and pharmaceuticals fell by 0.3% and 0.6%, respectively, following Trump's tariff plans on semiconductors and pharmaceuticals. The BSE Sensex attempted to rise, tracking a rally in Wall Street's S&P overnight.."

However, the data also explained that ongoing concerns about weak corporate earnings, continuous foreign outflows, and global trade uncertainties capped the gains. Traders were also cautious ahead of the Federal Reserve's January meeting minutes.

Investors will be looking for rate cut trajectory and more clues on the US economy from Fed officials in their minutes of the meeting. In its latest monetary policy meeting which was held from January 28-29, 2025, the FOMC led by chair Jerome Powell had kept interest rates unchanged to 4.25% to 4.5% after 100 basis points aggressive cut in last few months of 2024.

Also, as per Dr V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services, despite largecap valuations turning fair, and even attractive in segments like financials, the market continues to be weak. Seen in the context of new records being set by S&P 500 and Nasdaq, India's underperformance is striking. News of Chinese authorities encouraging their top businessmen to invest is another headwind for India since Chinese stocks are cheap ( Hang Seng is trading at PE of 12.6) and may attract big inflows from FIIs, which means FIIs might continue selling in India.

Vijayakumar added, FIIs will start buying when the dollar depreciates and the US bond yields start coming down. This might take time. A strong fundamental factor that can turn FIIs into buyers is indication of earnings recovery in India. This is likely in early FY 2026. High frequency indicators might suggest a turnaround in growth and earrings soon.