BSE market cap crosses ₹500 lakh crore as Sensex surges 1,600 pts, Nifty tops 24,300: What fuelled the rally?

Tracking a strong rally on Wall Street overnight, Indian equity markets opened on a firm note on Thursday, with benchmark indices Sensex and Nifty surging nearly 2% in early trade. The BSE Sensex jumped as much as 1,620 points, or 2%, to 78,922.44, while the Nifty 50 climbed above the 24,300 mark.

The rally added ₹5.63 lakh crore to the total market capitalisation of BSE-listed companies, taking it past the historic ₹500 lakh crore milestone to ₹500.05 lakh crore.

The strong buying momentum was driven by growing optimism that the outcome of the US midterm elections could increase political pressure on President Donald Trump to pursue a negotiated settlement to the US-Israeli conflict with Iran.

At around 9:40 am, the Sensex was trading at 78,788.63, up 1,487.23 points, or 1.92%, while the Nifty was at 24,339.80, gaining 410.60 points, or 1.71%.

The rally was driven by a combination of easing geopolitical concerns, a sharp decline in crude oil prices, renewed foreign institutional investor (FII) buying and strong gains across global markets following the US midterm election outcome.

Crude oil prices plunge nearly 9%

A sharp correction in international crude oil prices emerged as one of the biggest triggers for the rally. Brent crude plunged 8.7%, or $8.98, in a single session on Wednesday, slipping below $94 a barrel to a two-month low, while West Texas Intermediate (WTI) fell to around $87.

The decline followed growing market expectations that the US midterm election outcome could increase political pressure on President Donald Trump to pursue a negotiated settlement to the US-Israeli conflict with Iran.

For India, which depends heavily on crude oil imports, lower oil prices could ease pressure on the import bill, domestic inflation and the current account deficit, provided the correction is sustained.

V K Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, said the sharp fall in Brent crude was the strongest positive for the market.

"With tailwinds for the economy getting stronger, the bullish trend in the market is set to continue. The strongest positive for the market is the sharp 10% fall in Brent crude to around $94 level," he said.

FIIs return with ₹20,834 crore buying in 4 sessions

The return of foreign investors has provided another significant boost to domestic equities. FIIs bought equities worth ₹20,834 crore in the cash market over the past four trading sessions, including purchases worth ₹7,284 crore in the previous session.

Vijayakumar said the decline in crude prices, resilience in the Indian economy and improving corporate earnings had changed the FII stance towards India. He also cited expectations of a possible abolition of long-term capital gains (LTCG) tax in the upcoming Budget as a factor supporting sentiment.

"There is more short-covering to happen in large-caps and, therefore, expect further rebound in large-caps led by the banking/financial majors," he said.

However, he cautioned that domestic institutional investors (DIIs) could book profits at higher levels, given their inclination to sell on rallies.

Wall Street rally lifts global risk appetite

Global cues also supported the domestic market. US equities rallied sharply after uncertainty surrounding the midterm elections eased following the Democratic sweep of both chambers of Congress.

The Dow Jones Industrial Average surged more than 3%, marking its strongest post-midterm performance in over four decades, while the S&P 500 and Nasdaq Composite also closed higher.

Devarsh Vakil, Head of Prime Research at HDFC Securities, said investors welcomed the easing of election uncertainty, with expectations that political gridlock could limit sweeping changes to fiscal policy and corporate earnings.

The decline in crude prices, retreat in US Treasury yields and weakness in the US dollar further supported global risk appetite.

Auto, financial and IT stocks lead gains

The market saw broad-based buying, with 29 of the 30 Sensex constituents trading higher. Auto, financial services and IT stocks led sectoral gains, with the Nifty Auto index rising 2.56%, Nifty Financial Services 2.42% and Nifty IT 2.45%.

IndiGo led the Sensex gainers, surging 4.81%, followed by Bajaj Finance (4.65%) and Asian Paints (4.42%). Maruti Suzuki rose 3.79%, while Mahindra & Mahindra gained 3.31%. Among IT stocks, Infosys advanced 3.06% and Tech Mahindra 2.84%.

Other notable gainers included UltraTech Cement (2.75%), Bajaj Finserv (2.73%), Larsen & Toubro (2.60%), HDFC Bank (2.55%), TCS (2.48%) and ICICI Bank (2.41%). HCL Technologies, Trent, Axis Bank and Sun Pharma also gained between 1.87% and 2.17%.

The Nifty Realty index climbed 2.02%, while the Nifty Private Bank and Nifty PSU Bank indices rose 1.65% and 1.52%, respectively. Oil & Gas and FMCG stocks posted relatively modest gains of 0.60% and 0.59%.

Among the other heavyweight stocks, SBI gained 1.73%, Titan 1.36% and Eternal 1.25%. Reliance Industries edged up 0.48%, while Kotak Mahindra Bank and Bharti Airtel rose 0.25% and 0.15%, respectively. NTPC was the only Sensex constituent in the red, slipping 0.26%.

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