Strong Global Cues, Rate Cut Hopes and FII Buying Drive Markets Higher
New Delhi, June 5, 2025 – Indian stock markets continued their upward momentum for the second consecutive day, driven by multiple positive factors. The BSE Sensex surged 429 points, or 0.53%, to reach 81,427, while the Nifty 50 rose 130 points, crossing the 24,750 mark during early trade. The rally was supported by investor optimism, foreign inflows, and expectations of monetary easing.
Let’s take a look at the seven major reasons behind today’s stock market rally:
1. Expectations of Repo Rate Cut by RBI
Investor sentiment was lifted by hopes of a 0.25% repo rate cut in the upcoming RBI Monetary Policy Committee (MPC) meeting, set to conclude on Friday. With retail inflation dropping to 3.16% in April—its lowest in six years—the Reserve Bank of India is likely to prioritize economic growth. A rate cut would lower borrowing costs and boost spending, positively impacting the markets.
2. Positive Trends in Asian Markets
Asian markets traded in the green, with indices like South Korea’s KOSPI, Hong Kong’s Hang Seng, and China’s SSE Composite registering gains. While US markets closed on a mixed note on Wednesday, strong Asian cues added to the bullish sentiment in Indian markets.
3. Renewed Buying by Foreign Investors
Foreign Institutional Investors (FIIs) turned net buyers on Wednesday, infusing ₹1,076.18 crore into Indian equities. This marked the first net FII inflow of the week, which boosted investor confidence and supported the market’s upward move.
4. Hopes of US-China Trade Tension Easing
Optimism grew around a potential phone conversation between US President Donald Trump and Chinese President Xi Jinping, aimed at easing trade tensions. If talks proceed positively, it could signal a reduction in global trade uncertainty, encouraging investors to take risks and invest in equities.
5. Decline in Crude Oil Prices
Brent crude prices dipped by 0.12% to $64.78 per barrel in the international market. As India imports over 80% of its crude oil, any fall in global oil prices is considered beneficial. Lower oil prices help reduce inflation and trade deficits, creating a favorable economic environment.
6. Possibility of US Fed Rate Cut
Job data from the US showed private sector employment rose by just 37,000 in May, significantly below expectations. This weak data has led to speculation that the US Federal Reserve may cut interest rates. Lower US interest rates could trigger capital inflows into emerging markets like India, making them more attractive to global investors.
7. ECB May Also Ease Rates
The European Central Bank (ECB) is also expected to cut interest rates in its policy meeting due to sluggish economic growth and soft inflation. This global trend toward monetary easing has improved risk appetite among investors, further propelling global equity markets, including India.
Top Gainers in Today’s Market
Stocks such as Dr. Reddy’s Laboratories, Trent, Grasim Industries, Adani Ports, and Eternal gained up to 5% on the Nifty index, contributing significantly to today’s rally.
Conclusion
With multiple domestic and international factors aligning positively, the Indian stock market has entered a strong bullish phase. Continued foreign investment, supportive global cues, and expected monetary easing from key central banks are likely to keep the market sentiment upbeat in the near term.