On Thursday, June 5, 2025, Indian equity markets witnessed a significant upswing, with the BSE Sensex climbing over 400 points and the NSE Nifty surpassing the 24,750 mark. This rally was driven by a confluence of factors, including anticipation of a rate cut by the Reserve Bank of India (RBI), positive global cues, and strong performances in key sectors.
Market Performance Overview
In early trading, the Sensex jumped 429.43 points or 0.53% to 81,427.68, while the Nifty climbed 130.45 points or 0.53%, breaching the crucial 24,750 level . The rally was broad-based, with gains observed across various sectors, reflecting robust investor sentiment.
Key Drivers Behind the Market Rally
1. Anticipation of RBI Rate Cut
Investor optimism was bolstered by expectations that the RBI would announce a 25 basis points rate cut in its upcoming Monetary Policy Committee (MPC) meeting scheduled for June 6. Such a move would mark the third consecutive rate reduction, aimed at stimulating economic growth amid global uncertainties .
2. Positive Global Cues
Global markets provided a favorable backdrop, with Asian stocks trading higher and U.S. Treasury yields weakening. A subdued dollar and expectations of dovish policies from major central banks contributed to the positive sentiment, encouraging foreign institutional investors (FIIs) to increase their exposure to emerging markets like India
3. Sectoral Performances
- Pharmaceuticals: The pharma sector led the gains, with Dr. Reddy’s Laboratories surging 3% following a collaboration with Alvotech for developing a cancer drug biosimilar. Other pharma companies like Zydus and Glenmark also posted gains due to positive drug development updates
- Reliance Industries: Shares of Reliance Industries climbed 1.3%, buoyed by optimistic earnings projections from JP Morgan, driven by growth in its retail and telecom segments
- Mid and Small Caps: Broader indices, including small-cap and mid-cap stocks, also gained, reflecting widespread investor confidence.
Market Breadth and Investor Activity
The market breadth was positive, with a higher number of advancing stocks compared to decliners. Several stocks on the Bombay Stock Exchange (BSE) saw gains of over 10%, indicating strong buying interest, especially in frontline blue-chip stocks
Foreign institutional investors (FIIs) were net buyers, contributing to the upward momentum. Their increased participation underscores the attractiveness of Indian equities in the current global economic landscape
Outlook Ahead
As investors await the RBI’s policy decision, the market is likely to remain sensitive to both domestic and global developments. A rate cut could further enhance liquidity and support economic growth, potentially sustaining the bullish trend in the equity markets. However, ongoing geopolitical tensions and global economic indicators will continue to play a crucial role in shaping investor sentiment.
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