CLOSING BELL: Nifty, Sensex hit record closing highs on Fed rate cut prospects

Stock market news: Benchmark indexes, S&P BSE Sensex and NSE Nifty 50 closed at record highs on Thursday, driven by the anticipation of a US interest rate cut in September, which analysts predict could lead to increased foreign investment in domestic equities.

The NSE Nifty 50 rose 0.24 per cent to 25,010.9, while the S&P BSE Sensex settled 0.15 per cent higher at 81,867.55. Both indexes reached all-time highs during the trading session, with the Nifty surpassing 25,000 points for the first time.

Most Asian markets experienced gains, with the MSCI Asia ex-Japan index adding 0.4 per cent, following comments from Fed Chair Powell about a "growing sense of confidence" that rate cuts might commence in September.

"US rate cut seems almost a certainty in September. It's important to note that a gradual rate reduction will happen over four to six quarters, which could trigger steady foreign inflows," said Deven Choksey, managing director at DRChoksey FinServ.

However, in the near term, Indian markets may only see incremental gains as profit booking is likely to continue at record highs, three analysts noted.

The Energy sector emerged as the top performer, gaining about 2 per cent. Oil upstream companies ONGC and Oil India saw their shares rise by 2.3 per cent and 3.7 per cent, respectively, after the government reduced the windfall tax on petroleum crude. Lower windfall taxes benefit upstream oil companies by reducing the tax on their crude oil output.

Coal India gained 3.5 per cent after surpassing quarterly profit estimates, making it one of the top three gainers in the Nifty 50, alongside ONGC. Maruti Suzuki's shares jumped about 2 per cent after the company beat its June-quarter profit estimates. This gain was an outlier in the auto index, which dropped 0.75 per cent due to weaker-than-expected sales reported by Tata Motors and Mahindra & Mahindra in July.

Conversely, the broader, more domestically focused small-cap and mid-cap indexes dropped about 1 per cent each. Analysts expect selling pressure to continue in these segments due to their elevated valuations.

(With Reuters inputs.)