The Indian stock market has witnessed a significant rally over the past few days, as Nifty and Sensex posted gains for the third consecutive session. The Nifty 50 surged by 181 points, closing at a one-month high of 24,457, while the Sensex added 598 points, reaching 80,846. The rally is primarily driven by a strong performance in the financial sector, with HDFC and Axis Bank being among the top gainers. This has been fueled by growing optimism about the easing of monetary policy by the Reserve Bank of India (RBI) to address the slow economic growth.

The rally comes at a time when India's GDP growth slowed to a near two-year low of 5.4% in the July-September quarter, largely due to the underperformance of the manufacturing and mining sectors. The disappointing growth numbers have led to widespread speculation that the RBI may soon implement rate cuts to support the economy. Several brokerages have already lowered their FY25 real GDP growth estimates, with some suggesting that the government may need to introduce more monetary and fiscal support to achieve a 6.5% YoY growth rate.

Meanwhile, global market sentiment has also turned more optimistic, with the US Federal Reserve signaling its inclination to cut interest rates. The probability of a 25-basis-point rate cut in December has surged to 75.2%, up from 66% the previous day, according to the Fedwatch tool. This, along with expectations of favorable economic policies, has raised hopes that the Indian market could continue to gain momentum in the near term.

The Nifty Bank index outperformed the broader market, rising more than 1%, led by HDFC Bank and Axis Bank, which were the top gainers in the sector. This growth was driven by positive sentiment surrounding financial stocks as investors remain hopeful about RBI's upcoming actions. The Midcap Index also showed strength, climbing 508 points to reach 57,509, signaling broad-based market optimism.

Adani Group stocks were another notable highlight, with Adani Ports climbing 6% and Adani Enterprises rising by 3%. These gains came as the market reacted positively to the strong performance of these stocks amid the broader market rally. Additionally, Reliance and ONGC saw gains of up to 2% after the government removed the windfall tax, boosting sentiment around these energy giants.

The pharmaceutical sector saw mixed results, with Cipla reversing yesterday's losses to close nearly 2% higher. On the other hand, Granules India saw a significant dip of 10% after the US FDA classified its Gagillapur facility as "Official Action Indicated," triggering concerns about potential regulatory challenges. Meanwhile, Torrent Power saw its shares rise 5% after it announced the opening of a ₹3,500 crore Qualified Institutional Placement (QIP).

Health-related stocks also performed well, with Niva Bupa rising by 10%, and Star Health climbing 4%, driven by speculation about a potential GST reduction on health insurance premiums. In another noteworthy development, MOIL posted its best-ever November sales, resulting in a 4% increase in its stock price.

However, not all stocks were in the green. CE Info saw a decline of 9% after announcing plans to enter the B2C business, while Indegene fell 6% following a block deal involving 4.7% of its equity.

Despite the few losses, the market breadth remained positive, with the NSE advance-decline ratio standing at 3:1, reflecting broad-based investor optimism. Analysts are expecting further gains in the near term, driven by positive global cues, government spending, and optimism around monetary policy changes by the RBI.

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