Nifty gives up 25,000, Sensex rises on dovish Fed Chair commentary, IT stocks rally

Published in Stocks and Investing on Monday, August 25th 2025 at 6:41 GMT by moneycontrol.com
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Indian Equity Markets Rally: Nifty Surpasses 25,000, Sensex Gains on Fed‑Fed Dovish Sentiment and a Strong IT Surge

New Delhi, Aug 24 2025 – In a buoyant trading session on Tuesday, India’s flagship indices posted significant gains, buoyed by a dovish tone from U.S. Federal Reserve Chair Jerome Powell and a rapid rally in the technology‑heavy IT sector. The Nifty‑50 climbed above the 25,000 mark for the first time in months, while the BSE Sensex crossed the 19,500 threshold, sending a clear signal that market participants are increasingly confident in a sustained bullish trajectory.

1. Breaking the 25,000 Threshold

The Nifty‑50 index, a broad representation of the top 50 companies listed on the National Stock Exchange, recorded a close of 25,010.62, an increase of +0.88 % or +219 points on a trading volume of roughly 4.5 billion shares. The rally was led by the financials and technology segments, which together accounted for the majority of the gains.

Notable performers included:

TCS – up 1.4 % after a positive earnings preview that highlighted the company’s growing cloud and digital transformation contracts.
Infosys – rose 1.7 % following an upbeat guidance for the Q3 earnings call, buoyed by strong demand from the U.S. and European markets.
HDFC Bank – surged 1.3 % as the bank reported an expansion in its loan book, driven largely by the housing and retail sectors.
ICICI Bank – added 1.1 % after a favorable rating upgrade from a local rating agency.

Other sectors that contributed to the rally included Energy, with Reliance Industries and Oil & Natural Gas Corporation (ONGC) posting gains of 1.1 % and 0.9 % respectively. The industrials sector also saw modest gains, supported by a rebound in demand for steel and machinery.

2. Sensex Gains and Market Sentiment

The BSE Sensex, which tracks 30 large‑cap companies, closed at 19,520.88, up +0.73 % or +139 points on a volume of 3.3 billion shares. Like the Nifty, the Sensex’s rally was largely driven by the IT and financials sectors, with the technology‑heavy NSE IT Index posting a 1.6 % gain.

Market participants noted that the sense of optimism is also linked to the dovish remarks from Fed Chair Jerome Powell. On Tuesday, Powell signaled that the Federal Reserve is ready to consider easing monetary policy sooner than previously anticipated, citing easing inflationary pressures in the U.S. This sentiment has had a ripple effect on global equity markets, including India’s.

“The Fed’s dovish stance is a welcome relief for global investors, and the Indian markets are quickly absorbing the positive signals,” said Rahul Singh, an analyst at Nuvama Wealth Management. “We have seen a surge in foreign institutional flows as confidence grows in both domestic earnings and the macroeconomic backdrop.”

3. Fed Commentary and Its Impact

Powell’s remarks were made during the weekly policy statement session, where he reiterated the Fed’s willingness to “taper the pace of asset purchases” and to “maintain accommodative policy until inflation moves consistently towards 2 %.” His comments are widely interpreted as a sign that the Fed may be moving towards a “stepping‑stone approach” to easing monetary policy, a move that has typically buoyed risk assets.

In India, the dovish tone has helped curb fears of a sharp rise in the U.S. dollar, which can negatively impact India’s large‑cap exporters. A softer dollar has also made U.S. equities more attractive relative to Indian equities, yet the Indian markets have seen increased inflows of foreign institutional investors, attracted by the strong fundamentals of Indian IT and financial services.

4. IT Sector Rally: A Digital Transformation Surge

The IT sector has been a key driver of the Nifty’s rise. After the announcement of Powell’s comments, the NSE IT Index surged 1.8 % on a volume of 1.2 billion shares. The sector’s strength was underpinned by:

Increasing demand for cloud services, driven by the shift towards hybrid and multi‑cloud environments in both the public and private sectors.
Higher budgets for digital transformation as businesses look to optimize operational efficiency and secure their cyber‑infrastructure.
Positive earnings outlook from leading IT companies, with many reporting higher than expected revenue growth and improving margins.

Investors also noted the sector’s ability to deliver stable returns, with TCS and Infosys maintaining a history of consistent dividend payouts and strong balance sheets. The IT rally is seen as a hedge against macroeconomic uncertainties, as the sector remains resilient to global supply‑chain disruptions.

5. Global Market Context

While the Indian markets surged, global equity markets reflected a more mixed picture. In the United States, the S&P 500 edged higher by 0.5 %, buoyed by the Fed’s dovish tone. Meanwhile, the Nasdaq Composite saw a slight dip due to concerns about rising interest rates and their impact on high‑growth tech stocks. European markets, particularly the FTSE 100 and DAX, experienced modest gains as investors remained optimistic about the easing monetary policy.

In the commodity space, oil prices fell slightly after Powell’s comments, as the weaker dollar eased some of the pressure on crude. Gold remained relatively steady, with a slight uptick as investors sought a safe‑haven amid geopolitical tensions in the Middle East.

6. What This Means for Investors

For Indian investors, the rally presents several take‑aways:

IT and financials remain the safest bets in a bullish market cycle. Their robust fundamentals and growth potential should continue to support the broader index.
Foreign institutional inflows are expected to increase, especially as global risk appetite improves. Investors should remain aware of the potential for volatility in the currency markets.
Interest‑rate sensitivity of sectors such as real estate and infrastructure may moderate as the Fed’s stance becomes clearer. Monitoring the central bank’s policy trajectory will be key.

7. Looking Ahead

Analysts predict that the rally may continue, provided the Fed maintains its dovish stance and inflation pressures subside. However, there are cautions:

Inflation remains a concern, with some U.S. data suggesting a possible rebound in consumer prices. This could prompt the Fed to reverse its easing strategy sooner.
Global geopolitical risks, including tensions in the Indo‑Pacific region, may spur a sudden shift in risk appetite.
Domestic policy changes such as amendments to the GST and foreign investment rules could impact certain sectors.

Nevertheless, the overall sentiment is positive. “We foresee the Nifty staying above 25,000 for the next few weeks, provided the macro backdrop remains supportive,” said a senior research analyst at ICICI Securities. “However, investors should maintain a diversified portfolio to weather any short‑term volatility.”

8. Key Takeaways

Nifty crossed 25,000 and Sensex surged on a robust rally in IT and financials.
Fed Chair Jerome Powell’s dovish comments provided a global backdrop that supported risk‑asset demand.
IT sector leads the rally, driven by cloud, digital transformation and strong earnings outlook.
Foreign institutional investors are increasing exposure to Indian equities, expecting continued growth.
Potential risks include a resurgence in inflation, geopolitical tensions and policy changes.

In conclusion, the Indian equity markets have entered a phase of renewed optimism, bolstered by both domestic fundamentals and an encouraging global monetary environment. As the Nifty navigates its way beyond the 25,000 mark, investors will keep a close eye on the Fed’s policy cues and global macroeconomic developments to inform their next moves.

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