Global Markets Rally on Fed Rate Relief While India's Stock Surge Fueled by U.S. Trade Optimism

Friday’s trading session shows Indian equities positioned for strong gains as optimism surrounding U.S.-India trade negotiations drives investor sentiment. The momentum builds on Thursday’s recovery, when domestic benchmarks climbed approximately 0.5 percent each following three consecutive sessions of weakness.

Trade Talks Bolster Market Sentiment

Discussions between Indian and American officials are moving forward constructively, according to Union Minister Piyush Goyal’s Thursday statement. While no completion date has been specified, India’s chief economic advisor V. Anantha Nageswaran told Bloomberg TV that the majority of outstanding differences have been resolved, with an agreement potentially finalized by March 2025. Prime Minister Modi and President Trump held a call Thursday to reinforce the economic partnership between both nations.

Currency and Investment Flows

The Indian rupee depreciated 0.4 percent to close at 90.3675 against the dollar Thursday, marking a pullback from its intraday low of 90.4675. Foreign institutional investors liquidated equity positions worth Rs 2,021 crore on Wednesday, though domestic institutional buyers countered with Rs 3,796 crore in net purchases, demonstrating confidence from local market participants.

Broader Asian and Global Market Dynamics

Asian markets advanced this morning despite concerns over technology sector profitability, with semiconductor companies like Broadcom flagging margin compression tied to elevated artificial intelligence infrastructure spending. The U.S. dollar index retreated to near two-month lows as the Federal Reserve signaled a less aggressive interest rate adjustment trajectory than previously anticipated.

Commodity markets delivered mixed signals. Gold retreated after hitting seven-week peaks, while silver extended its bullish streak to fresh record levels. Crude oil edged upward following U.S. seizure of a Venezuelan-flagged tanker and related sanctions announcements.

U.S. Markets Mixed on Mixed Economic Data

American equities finished overnight trading predominantly positive, adding to Wednesday’s post-Fed-decision rally. The Dow Jones jumped 1.3 percent and the S&P 500 posted 0.2 percent gains to establish new all-time highs. However, the Nasdaq declined 0.3 percent as Oracle’s disappointing earnings and subdued forward guidance reignited concerns about artificial intelligence spending sustainability.

Economic data proved contradictory. Weekly jobless claims surged by their largest amount in nearly 4.5 years, yet the September trade deficit contracted unexpectedly to its tightest level since mid-2020.

Europe Responds Positively to Fed Easing

European bourses closed higher on Thursday, responding favorably to the Fed’s policy shift and communications. The Stoxx 600 index climbed 0.6 percent, while Germany’s DAX gained 0.7 percent, France’s CAC 40 advanced 0.8 percent, and Britain’s FTSE 100 rose 0.5 percent.

The convergence of moderating U.S. monetary policy, progressing India-U.S. trade discussions, and resilient institutional buying creates a supportive environment for Indian equity markets heading into the weekend session.