Indian Markets Rebound as Foreign Inflows, Rate-Cut Hopes Lift Sentiment

Indian equity benchmarks ended higher on Monday, snapping recent weakness as expectations of foreign investors returning to the market boosted sentiment. The Nifty 50 rose 0.79% to close at 26,172.4, while the BSE Sensex gained 0.75% to 85,567.48. Gains were broad-based, with 15 of the 16 major sectors advancing, led by information technology and metal stocks. Broader markets also outperformed, with mid-cap and small-cap indices rising 0.8% and 1.2%, respectively.

The rebound follows three consecutive weeks of losses for the Nifty 50, driven earlier by concerns over foreign fund outflows, a weakening rupee and delays in an India–U.S. trade deal. However, foreign portfolio investors have turned net buyers over the last three sessions, purchasing shares worth 37.76 billion rupees and easing monthly outflows to 120.2 billion rupees. Analysts cautioned that markets may remain range-bound without fresh triggers such as progress on trade negotiations.

Investor sentiment was further supported by expectations of potential rate cuts by the Reserve Bank of India and the U.S. Federal Reserve next year. IT stocks extended gains for a fourth straight session, with Infosys and Wipro climbing over 3% each, aided by a weaker rupee and sector rotation. Metal stocks advanced on rising base metal prices, while select stocks such as Shriram Finance and Tata Motors outperformed on deal-related news and positive brokerage calls.

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