Indian stock markets extended their rising trend on 21st March, with the Sensex rising 899 points to
76,348, its one-month peak. It was the fourth session of gains in a row, with the benchmark index
rising 2,500 points, or 3.4%, during the period.
The Nifty 50 on the NSE also rose 283 points, or 1.2%, to end at 23,191 and recover the 23,000 level
after close to a month. The rally was propelled by dovish comments by US Federal Reserve Chairman
Jerome Powell, who confirmed hopes for two interest rate cuts this year despite rising fears of
inflation and trade policies under the Trump regime.
US Fed’s position ignites world optimism
The Federal Reserve left interest rates unchanged Wednesday evening but reaffirmed its intention to
lower interest rates twice in 2025. However, it did cut its economic growth estimates and boosted its
inflation forecasts, citing increasing uncertainties over Trump’s tariff policies.
The rally was primarily driven by US market gains, as investors were comforted by the Fed’s rate-cut
promise. But there were mixed feelings due to reduced growth projections and rising inflation fears,
Motilal Oswal Financial Services Head of Retail Research Siddhartha Khemka said.
Investor wealth increases by Rs 3.6 lakh crore
The recent stock market rally brought in a gigantic Rs 3.6 lakh crore to the wealth of investors, taking
the total market capitalisation of BSE-listed firms to Rs 408.6 lakh crore. This was driven by solid
foreign investor support and favourable global trends, led by the US Federal Reserve’s dovish
approach to interest rates. The sharp recovery in the market during the last four sessions has also
improved investor optimism, with the Sensex and Nifty recapturing crucial levels. While foreign
portfolio investors turned net buyers, domestic institutional investors sold, indicating the change in
market dynamics in response to changing global economic trends and policy uncertainties.
Foreign investors come back, DIIs book profits
In contrast to recent patterns, the rally was spearheaded by robust foreign inflows, with foreign
portfolio investors (FPIs) emerging as net buyers, buying Rs 3,239 crore worth of shares on Thursday.
Domestic institutional investors (DIIs), however, were net sellers, selling Rs 3,136 crore worth of
shares, based on BSE data.
In spite of this short-term reversal, FPIs have remained net sellers in 2025 so far, pulling out almost
Rs 1.5 lakh crore. In contrast, DIIs have pumped in Rs 1.85 lakh crore into Indian equities,
underpinning the overall market trend, according to NSDL and BSE data.
Dollar index weakening supports market sentiment
The depreciating US dollar index has assisted in smoothing out FPI outflows, supporting Indian
equities. The persistent slide in the dollar index has helped buffer the effect of FII selling, with robust
DII buying contributing to maintaining the ongoing market rally. Geojit Financial Services’ Head of
Research Vinod Nair said this has been an important contributor to sustaining recent gains amidst
global uncertainties and changing economic conditions.

Forecast: Can the rally be sustained?
While the Fed’s rate-cut stance has boosted investor confidence, fears of accelerating inflation and
decelerating growth still persist. Moreover, market uncertainty surrounding Trump’s trade policies
may impact market dynamics over the next few months.
Until then, the Sensex and Nifty’s recovery to crucial levels confirms fresh buying momentum, but
market players will be observing global economic trends, corporate earnings, and local policy
developments to assess the sustainability of the rally.
Conclusion
The Indian equity market has demonstrated significant strength, with strong gains based on foreign
flows and positive overseas trends. Still, there remain apprehensions over policy uncertainty,
inflationary concerns, and an impending economic slowdown that may upset the market. Despite
the recent spurt that has improved investor confidence, risks abound based on shifting global
economic developments. Investors are adopting a cautiously optimistic attitude, keeping a close eye
on international trends, central bank actions, and company earnings before investing. Market
sustainability in the future will depend on economic data, interest rate movements, and geopolitical
developments that may shape domestic and global financial markets.
Excerpt
The stock market rose as optimistic signs from the US Federal Reserve improved investor sentiment,
despite persistent worries regarding inflation and policies.