Indian benchmark indices, Sensex and Nifty, reached record highs during trading on Friday afternoon, with the Sensex peaking at 84,240 and the Nifty hitting 25,725, driven by widespread buying across various sectors. This surge significantly increased the overall market capitalisation of companies listed on the Bombay Stock Exchange (BSE), which climbed to nearly Rs 469 lakh crore.


During the trading session around noon, the Sensex had risen by 965 points, or approximately 1.2 per cent, settling at 84,149. Similarly, the Nifty experienced a gain of 290 points, translating to an increase of about 1.1 per cent, and was positioned at 25,706. Regarding market activity, a total of 2,196 shares advanced, while 1,071 shares saw declines and 105 shares remained unchanged, indicating a predominantly positive sentiment among investors.


Here Are The Factors Influencing This Market High:


Banking Stocks Lead The Rally


The Nifty Bank index marked its seventh consecutive session of gains, reaching a new high of 53,357. This was driven by increases in major banks such as ICICI Bank, HDFC Bank, and Kotak Mahindra, which rose by 1-2 per cent. Banking stocks have a significant weight in the benchmark indices, and after declines of 1.5 per cent in July and 0.4 per cent in August, the index has rebounded by over 4 per cent in September until now.


Implications Of The Fed's Rate-Cutting Cycle


The Federal Reserve's policy shift could influence the Reserve Bank of India's (RBI) approach, with some analysts forecasting a possible rate cut in the December policy meeting. 


Optimistic Global Market Outlook


In a boost for global markets, US benchmarks closed higher overnight following the Federal Reserve's decision to cut interest rates by 50 basis points and signal potential further reductions. The S&P 500 and the Dow Jones reached record highs, bolstered by stronger-than-expected jobless claims data that enhanced the global risk appetite.


Strength In Asia-Pacific Markets


Asian markets were robust today, with Japan's Nikkei 225 leading the way. Notably, Japan's core consumer price index rose by 2.8 per cent year-on-year, ahead of the Bank of Japan's upcoming policy meeting, where rates are anticipated to remain steady at 0.25 per cent.


Midcap And Smallcap Participation


The broader market showed signs of recovery today, bouncing back from recent selling pressure. The BSE Midcap and Smallcap indices snapped a three-day losing streak, climbing over 1 per cent each.


Increased Interest From Foreign Institutional Investors (FIIs)


The Fed's interest rate cut is a positive catalyst for Indian equities, enhancing global liquidity and potentially attracting more foreign funds. Hence further pushing today’s gain.