Indian stock markets closed higher on Friday, extending a rebound triggered by the U.S. Federal Reserve's recent policy shift, which helped limit weekly declines. Investor attention has now shifted to domestic inflation figures due after market hours.

Market Performance

• Indices: The Nifty 50 rose 0.57% to close at 26,046.95, and the Sensex gained 0.53% to 85,267.66. Despite the advance, both benchmarks recorded a 0.5% weekly decline as investors took profits near record highs earlier in the week.
• Sector Moves: The metals sector led Friday's rally, climbing 2.6%, buoyed by China's pledge for fiscal stimulus in 2026 and the Fed's rate cut.
• Broader Market: Weekly losses were broader, with eleven of sixteen major sectors declining. Small-cap and mid-cap indices fell 0.7% and 0.5%, respectively.

Key Drivers and Sentiment

• Fed Policy Impact: Analysts interpreted the Fed's 25-basis-point cut and less-hawkish tone as a signal of growing concern over the U.S. labor market, potentially leading to a more dovish stance ahead. This is viewed as positive for emerging markets like India.
• Macro Headwinds: Ongoing uncertainty in U.S.-India trade talks and persistent foreign capital outflows weighed on sentiment, contributing to the rupee hitting a record low against the U.S. dollar.

Notable Stock Moves

• Weekly Laggard: InterGlobe Aviation (IndiGo) slumped 9.5%, the worst performer on the Nifty, pressured by regulatory scrutiny following mass flight cancellations.
• Sector Outperformer: Tata Steel gained 2.9% for the week, ending a five-week losing streak after announcing the acquisition of iron ore pellets maker Thriveni Pellets.

Outlook
The market's near-term direction will be influenced by the upcoming domestic inflation data. While the Fed's supportive stance provided a cushion, persistent domestic and external macro concerns, including trade tensions and currency weakness, are likely to keep volatility elevated. The performance suggests a market balancing global liquidity optimism with local economic and geopolitical uncertainties.