Sensex jumps 1,300 points: Investors get Rs 5.25L cr richer - what's fueling the rally

NEW DELHI: Dalal Street returned from its Diwali break in a cheerful mood on Wednesday, with benchmark indices climbing to levels last seen eight months ago, in February. Sensex over 1,300 points during early trade, while Nifty50 crossed the 25,300 mark as buying spread across sectors. BSE Sensex opened at 82,250.52, up 1,143.87 points or 1.41%, while NSE Nifty50 started at 25,337.80, gaining 293.15 points or 1.17%. Both benchmarks touched their highest opening levels since February 27. The rally also made investors richer by around Rs 5.25 lakh crore. The total market capitalisation of BSE-listed companies rose to Rs 5,12,51,866 crore from Rs 5,07,26,775.40 crore in the previous session. All 16 major sectoral indices opened higher, while the Nifty Midcap 100 and Nifty Smallcap 100 gained 0.64% and 0.72%, respectively. Key triggers behind the market rally: FIIs return to Indian equities Foreign institutional investors (FIIs), who had been net sellers of Indian equities, have returned to Dalal Street with aggressive buying. They invested Rs 53,170 crore in the first six trading sessions of the month, emerging as one of the biggest triggers behind the market's recent rally. V K Vijayakumar, chief investment strategist, Geojit Investments, told ANI, "Nifty 50 has surged by 8.6% in just six trading days of this month. This surge was triggered mainly by the aggressive FII buying of Rs 53170 crores so far this month. The dramatic change in the market environment was triggered by positive global cues for India from the weakening of the AI trade." The shift in global cues, particularly the weakening of the AI trade, has helped change the investment environment for Indian equities. Vijayakumar expects foreign investors to maintain their buying momentum, providing further support to large-cap stocks. He further added, "Given the new favourable environment for the Indian market, FIIs are likely to continue buying, imparting resilience to the frontline stocks in banking/financials, telecom, capital goods, select auto and pharmaceutical majors. This rally, which has more steam left, will be led again by large-caps". Nvidia probe puts the AI trade under scrutiny Nvidia's probe into allegations that its CEO Jensen Huang was the target of a foreign intelligence effort has added to concerns around the global AI trade. The chipmaker's shares fell 8% on Monday, raising fresh questions about the AI-led market boom. The development appears to have indirectly benefit Indian equities, which have underperformed amid the global rush towards AI and chip stocks. As investors reassess concentrated AI bets, India is attracting fresh interest on the back of easing crude prices and strong domestic earnings. Last week, it emerged as one of Asia's biggest beneficiaries of the so-called 'anti-AI trade'. The shift has also prompted global banks to turn more positive on Indian markets. HSBC upgraded Indian equities to 'overweight' from 'neutral', while Citigroup raised its 12-month target for the Nifty 50. Crude cools below $100 per barrel Easing crude oil prices have provided another reason for investors to cheer. Brent crude futures fell to a two-month low of $89.16 per barrel on Tuesday after US officials played down the possibility of additional military action against Iran, easing concerns over potential supply disruptions. Prices recovered marginally on Wednesday, rising 0.5% to around $92 per barrel. Brent was trading at $92.41 in the commodities market, up around 1%. However, prices remained well below the levels seen earlier during the conflict. The moderation in crude prices has supported sentiment in Indian equities, with the recent decline offering a more favourable backdrop for domestic markets. Ponmudi R, CEO of Enrich Money, said, "Indian equities appear well positioned to extend their recent advance, with a sustained moderation in crude oil prices and a revival in foreign portfolio inflows providing a more supportive backdrop for domestic markets." Rupee gains ground against the dollar Rupee’s momentum has added to the positive mood in the currency and equity markets. It opened 20 paise stronger against the US dollar to 93.70 against the US dollar. Forex traders said that foreign investors were gradually finding their way back into the domestic market after months of cautious participation and substantial outflows. Rupee has emerged as one of Asia's best-performing currencies in FY27. Continued foreign fund inflows could provide an important cushion against external uncertainties, traders said. The currency's appreciation, along with renewed foreign buying and easing oil prices, has helped improve sentiment towards Indian equities. The Sensex and Nifty have gained around 10% so far this month. Strong Q2 earnings give markets another boost Beyond the buying frenzy, better-than-expected Q2 earnings have provided the rally with fundamental support. Nifty 50 companies recorded nearly 24% earnings growth in the second quarter, their highest in 12 quarters. Better-than-expected September-quarter earnings have added to the optimism, with 181 companies reporting a more than doubling of net profit year-on-year in Q2 FY27. Stronger demand, improved margins and a recovery across sectors including banking, metals, pharmaceuticals, energy and manufacturing have helped India Inc regain earnings momentum. The list includes major companies such as Indian Oil Corporation, JSW Steel, Hindustan Zinc, Adani Power, GAIL and Vedanta, alongside newer businesses such as Nykaa parent FSN E-Commerce Ventures, Paytm parent One97 Communications and Lenskart. Banking, auto and pharma stocks lead the sectoral charge The market rally was broad-based, with banking, automobile and pharmaceutical stocks among the major gainers during early trade. The Nifty Private Bank index advanced 1.39%, while the Nifty PSU Bank index gained 1.18%. The Nifty Auto index rose 1.15% and the Nifty Pharma index climbed 1%. Other sectors also joined the advance. The Nifty FMCG index gained 0.91%, while the Nifty IT and Nifty Metal indices rose 0.84% and 0.34%, respectively. The broader market also participated in the rally. The Nifty 100 advanced 1.12%, while the mid-cap and small-cap indices recorded gains, showing that buying interest was not limited to frontline stocks. Meanwhile, the positive sentiment extended to other Asian markets on Wednesday, with most regional indices trading in the green. Taiwan's Weighted Index led the gains, rising 1.90% to 43,514. South Korea's KOSPI advanced 1.70% to 5,327, while Japan's Nikkei 225 climbed 1.32% to 61,258. Singapore's Straits Times index edged up 0.38%. Hong Kong's Hang Seng, however, bucked the regional trend, declining 1% to 24,312. (Disclaimer: Recommendations and views on the stock market, other asset classes or personal finance management tips given by experts are their own. These opinions do not represent the views of The Times of India)