Indian stock markets extended their winning streak for the fourth consecutive session on Friday, driven by strong corporate earnings, optimism around the upcoming Union Budget 2025, and growing expectations of a rate cut by the Reserve Bank of India (RBI). The benchmark Sensex surged 741 points to close at 77,500.57, while the Nifty 50 climbed 258.90 points to settle at 23,508.40.
Investor sentiment remained buoyant as they anticipated pro-growth measures in the budget, including potential tax reliefs and increased capital expenditure, which could boost consumption and corporate earnings. Analysts also believe that the RBI is likely to announce a 25-basis-point cut in the repo rate next week, further fueling bullish momentum in the market.
Strong Corporate Earnings Drive Rally
The rally was primarily led by stellar third-quarter earnings from two major companies—Larsen & Toubro (L&T) and Nestlé India. Shares of L&T jumped 4.31% after the company reported a 14% rise in consolidated profit after tax, reflecting strong infrastructure demand. Nestlé India also gained 4.25% following a 4.94% increase in net profit, signaling resilience in the fast-moving consumer goods (FMCG) sector despite concerns over slowing consumer spending.
Banking and financial stocks witnessed strong buying as investors bet on a potential interest rate cut. Market experts suggest that a lower interest rate environment would improve liquidity conditions, benefiting credit growth and corporate borrowing.
Budget 2025 in Focus
Finance Minister Nirmala Sitharaman, presenting her eighth consecutive Union Budget, has drawn keen interest from the markets. As she began her speech, the Sensex, which had hit an intraday peak of 77,605.96, continued to trade in positive territory, though slightly off its highs, rising 270 points to 77,780.65. The Nifty was also up by 0.32% at 23,582.85.
Investors are particularly looking for measures aimed at boosting disposable income, such as tax reliefs, which could spur private consumption. Sectors such as infrastructure, railways, defence, and FMCG are expected to benefit if the government announces higher public spending.
Despite the optimism, analysts cautioned that any deviation from growth-focused measures in the budget could lead to profit-booking and market correction.
RBI Rate Cut Hopes Strengthen
In addition to budget expectations, the market is also factoring in a potential rate cut by the RBI. A Reuters poll of economists suggests that the central bank is likely to reduce the repo rate by 25 basis points to 6.25% at its next policy meeting scheduled for February 5-7. Over 70% of respondents in the poll expect this move, considering the recent economic slowdown.
Although India’s GDP growth has slowed to 5.4% in the July-September quarter from 8.2% last fiscal year, high inflation remains a concern. However, the RBI’s recent liquidity injections into the banking system have led many to believe that a rate cut is imminent.
Global Factors and Currency Fluctuations
Global market trends also played a role in shaping investor sentiment. The rupee hit a record low of 86.65 against the US dollar during intraday trading before recovering to 86.6050, aided by RBI intervention and the rally in equity markets.
Adding to global uncertainties, U.S. stock markets ended lower after the White House announced fresh trade tariffs. The Trump administration imposed a 25% tariff on imports from Canada and Mexico, while Chinese goods will face a 10% tariff. This move could impact global trade flows and investor confidence.
Gold Prices Soar to Record Highs
Amid stock market gains, gold prices in India touched an all-time high of ₹84,900 per 10 grams, driven by strong domestic demand and global market cues. The precious metal continued its rally for the third consecutive session, gaining ₹1,100 in a single day.
Experts suggest that gold’s rise is largely due to its status as a safe-haven asset, with investors seeking refuge amid global trade uncertainties and currency fluctuations.
Market Outlook
As investors digest budget announcements and await the RBI’s policy decision, the coming days could see heightened volatility. Market experts believe that continued policy support, coupled with strong corporate earnings, could sustain the bullish trend. However, any negative surprises in the budget or a shift in global market trends could trigger corrections.
For now, the Indian stock market remains in an upbeat mode, with the Sensex and Nifty riding high on budget optimism and hopes of an accommodative monetary policy.
