Why is the stock market rising today? Sensex gains 800 pts, Nifty tops 25,000; 4 key drivers of the rally
1. RBI Eases Norms for Project Financing
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2) Fed Signals Two Rate Cuts in 2025
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3. Weakening Dollar
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4. Return of FII Buying
Indian benchmark indices Sensex and Nifty rebounded strongly on Friday, snapping a three-day losing streak, led by gains in financials after the Reserve Bank of India ( RBI ) relaxed provisioning norms for project financing. However, escalating tensions in the Middle East could limit further upside.The BSE Sensex surged up to 800 points to break above the 82,100 mark, while the Nifty50 reclaimed the 25,000 level.Nifty Bank, Financial Services, Auto, and Metal were among the top-performing sectors, leading the rally. In the broader market, the Nifty Midcap and Smallcap indices also rose nearly 0.8% after Thursday's sharp decline.Meanwhile, the market capitalisation of all listed companies on BSE surged by Rs 3.57 lakh crore to Rs 446.37 lakh crore.The RBI on Thursday released its final guidelines for project financing, replacing multiple legacy circulars and aligning norms across banks, NBFCs, and co-operative banks."In comparison with the May-2024 draft proposal of 5% standard assets provisioning for under-construction projects, the 1.0%/1.25% provisioning for Infra/CRE projects under the final regulations gives a much-needed breather to project financiers, including REC and PFC," Emkay Global 's analyst Avinash Singh said.Lower provisioning norms will reduce funding costs for infrastructure and real estate projects, benefiting lenders.The US Federal Reserve kept interest rates unchanged but maintained its projection of two rate cuts in 2025. While inflation expectations have risen, the central bank's signal of easing monetary policy in the medium term was viewed positively by global markets.Despite expectations of slower GDP growth (1.4%) and higher inflation (3%) in the US next year, the indication of rate cuts offered some relief to equity investors.The US dollar index dropped to 98.57, extending a 0.34% decline. A weaker dollar generally boosts emerging market equities like India by attracting foreign capital and supporting the rupee.In bond markets, the US 10-year Treasury yield was steady at 4.389%, while the 2-year yield slipped by 2 basis points to 3.925%.Foreign institutional investors (FIIs) have turned net buyers, purchasing equities worth Rs 1,824 crore over the last two sessions.Meanwhile, domestic institutional investors (DIIs) continued their strong buying streak for the 12th consecutive day, investing Rs 2,566 crore—providing additional support to the market.: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
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