Metal, PSU Bank Rally Powers Sensex Higher: Top Reasons Behind The Move

Indian equity benchmarks ended higher for the fourth consecutive session on Wednesday, supported by strong buying in metal, PSU bank, capital goods and power stocks, while investors remained cautious ahead of the US Federal Reserve's policy decision.

The BSE Sensex rose 347.14 points, or 0.45%, to close at 77,155.62, while the NSE Nifty 50 gained 96.55 points, or 0.40%, to settle at 24,085.70.

Market breadth remained positive, with broader indices outperforming the benchmarks. The Nifty Midcap 100 advanced 0.5%, while the Nifty Smallcap 100 gained 0.8%.

Among Nifty constituents, Trent, Bharat Electronics (BEL), Hindalco Industries, Eternal and Tata Steel emerged as the top gainers. Tata Motors, Cipla, Bajaj Finserv, ONGC and Axis Bank were among the major laggards.

Metals, PSU Banks Lead Sectoral Gains

Sectorally, capital goods emerged as the best-performing segment, rising 2%. Metal, power and PSU bank indices gained more than 1% each, while consumer durables also ended firmly in positive territory.

The rally in metals came amid expectations of improving global demand and easing concerns over commodity markets. PSU banks extended recent gains, aided by expectations of mark-to-market benefits and regulatory support measures.

However, auto and realty stocks witnessed profit booking and ended around 0.5% lower.

Softer Crude, Stronger Rupee Support Sentiment

According to Vinod Nair, Head of Research at Geojit Investments, lower crude oil prices and a firmer rupee continued to provide support to domestic equities despite mixed global cues ahead of the Fed meeting.

"Indian equities extended their gains for a third straight session, supported by softer bond yields and a firmer rupee despite mixed global cues ahead of the FED's policy decision. Continued weakness in crude oil prices, driven by easing geopolitical tensions around the Strait of Hormuz, has kept investor sentiment buoyant," Nair said.

He added that gains were led by IT and metal stocks on expectations of a stable US rate cycle and improving global demand, while PSU banks benefited from mark-to-market gains and capital relief measures.

Although concerns regarding delayed monsoon progress and low reservoir levels triggered intermittent profit booking, late-session short covering helped benchmarks end with gains.

Fed Decision In Focus

Market participants largely remained on the sidelines ahead of the Federal Reserve's policy outcome, the first under new Chair Kevin Warsh.

Jateen Trivedi, VP Research Analyst - Commodity and Currency at LKP Securities, said investors are closely watching the Fed's statement, economic projections and commentary for clues on the future interest rate path.

He noted that gold traded in a narrow range ahead of the decision, with traders avoiding aggressive positions until there is greater clarity on monetary policy and the upcoming US-Iran meeting scheduled for Friday.

Currency markets also remained subdued. The rupee ended nearly unchanged at 94.53 against the US dollar, compared with Tuesday's close of 94.56.

Trivedi said the rupee traded in a wait-and-watch mode as both the dollar index and crude oil prices remained range-bound. He expects the domestic currency to move within a 94.00-94.85 range, with the Fed's communication likely to provide the next major trigger.

Technical Outlook Remains Positive

Sudeep Shah, Head of Technical and Derivatives Research at SBI Securities, said the Nifty traded in its narrowest range since February 2026, reflecting a lack of strong directional conviction.

Despite the subdued movement, the benchmark continues to trade above its 20-day and 50-day exponential moving averages, both of which are trending higher, indicating a positive undertone. The daily RSI stood at 59.13 and is close to crossing the 60 mark, which could further strengthen bullish momentum.

Shah added that Realty and IT indices led sectoral gains, while Metal and Healthcare underperformed. Broader market indices continued to consolidate within a narrow range, though market breadth remained positive with advancers outnumbering decliners in the Nifty 500 universe.