Closing Bell: Sensex surges 1,200 pts, Nifty tops 25K: 5 factors fuelling the rally

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The top five gainers on the Sensex pack were Tata Motors (4.2%), HCL Tech (3.6%), Adani Ports (2.6%), Eternal (2.4%), and Maruti Suzuki India (2.2%).
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Closing Bell: Sensex surges 1,200 pts, Nifty tops 25K: 5 factors fuelling the rally
The BSE Sensex and NSE Nifty ended 1.5% higher on May 15 Credits: Fortune India
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Indian share market witnessed a strong rally on Thursday, with the benchmark indices, BSE Sensex and NSE Nifty surging up to 1.6% in a period of choppy trade. The domestic equity market, which started the day on a bearish note, staged a strong recovery in the last few hours of trade as sentiment was lifted after U.S. President Donald Trump said that India had offered to reduce tariffs on U.S. goods. Speaking at a business gathering in Qatar, Trump claimed that India has proposed “zero tariffs” on U.S. goods as part of the new trade agreement with Washington. 

Welcoming the news, the BSE Sensex closed 1,200 points, or 1.48%, higher at 82,530.74. During the session, the 30-share index scaled an intraday high of 82,718.14, rising as much as 1,387 points, or 1.7% against the previous closing level.

On the BSE Sensex pack, barring IndusInd Bank, all 29 other constituents ended in positive terrain. The top five gainers on the Sensex were Tata Motors (4.2%), HCL Tech (3.6%), Adani Ports (2.6%), Eternal (2.4%), and Maruti Suzuki India (2.2%). IndusInd Bank shares ended marginally lower by 0.16%.

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Similarly, the Nifty50 ended above the 25,000-mark at 25,062.10, up by 395.20 points, or 1.6%. The index rose by as much as 449 points during the session, hitting an intraday high of 24,666.90.

On the sectoral front, all indices on the NSE settled in the green zone, with auto and realty emerging as top gainers, adding 1.9% each. The other notable gainers were metal (1.7%), IT (1.1%), private bank (1%), Financial Services (1.3%), and Bank Nifty (1%).

The fear index (India VIX), which gauges market volatility, dropped further by 1.93% to 16.89 points, indicating improving overall market sentiments.

Here are the five factors that sparked the rally:

Trump’s comment on India-U.S. trade deal

The report of U.S.-India tariff talks has given a new boost to the domestic markets, driving broad-based gains across sectors. U.S. President Donald Trump, who is on a state visit to Qatar, claimed that India offered to import U.S.-made goods at virtually zero tariffs. Speaking at an event which was attended by business leaders, Trump revealed that the Indian government “offered us a deal where basically they are willing to literally charge us no tariff.”

"The market staged a robust rebound, closing with substantial gains, driven by a decline in domestic inflation and positive signals from the U.S. regarding a potential trade agreement with India,” said Vinod Nair, Head of Research, Geojit Investments Limited.

Sustained rally in broader market

The broader market continued gaining streak for the fourth consecutive session, with the Nifty Midcap100 and Nifty Smallcap100 indices adding 0.70% and 0.54%, respectively.

The growing market optimism amid a sharp decline in both global and domestic risks as well as recovery in local demand, as reflected in the March quarter corporate earnings, have sparked a rally in mid- and small-cap stocks, said Nair of Geojit Investments. He added that midcaps are witnessing renewed interest, fuelled by marginal upgrades in recent earnings and the potential for a stronger rebound in FY26. Contributing factors include a consistent decline in inflation, rising disposable incomes, increased government spending, and falling interest rates.

Surge in rate-sensitive auto and realty sectors

The market sentiment was further buoyed by growing optimism around reduced operational costs and a potentially more accommodative monetary policy stance. Rate-sensitive sectors such as automobiles and real estate led the rally, supported by upbeat industry forecasts. There is speculation in the market that the Reserve Bank of India may cut repo rate by 50 basis points in the next policy meeting, after reducing the key interest rate by 25 bps in the last two MPCs.

Investor will also keep a close eye on the upcoming speech by the Federal Reserve Chair last tonight, which is anticipated to provide further clarity on the future policy trajectory, particularly in light of the recent easing in U.S. inflation data.

Sustained buying by FIIs and DIIs

On the institutional front, both foreign institutional investors (FIIs) and domestic institutional investors (DIIs) continued to support Indian equities. They collectively purchased equities worth around ₹1,200 crore on Wednesday, providing a fillip to the domestic market.

So far in May, FIIs remained net buyers in Indian cash market, barring a day on May 9, infusing a total of ₹9,559 crore month-to-date. On the other hand, DII have invested ₹19,780 crore so far this month.  

Technical outlook

Technically, after an early morning intraday selloff, the benchmark indices Nifty and Sensex took support near 24,500 and 80800 levels and bounced back sharply. From the day's lowest point, the market rallied over 600 and 1,900 points, clearing the crucial 25,000 and 82,500 marks and managed to close above it, which is largely positive.

“Moreover, there is a bullish candle on the daily charts and an uptrend continuation formation on the intraday charts, indicating a further uptrend from the current levels,” said Shrikant Chouhan, Head – Equity Research, Kotak Securities.

“We believe that the market's outlook remains positive, but buying on intraday corrections and selling on rallies would be the ideal strategy for day traders. On the downside, 24,900/82200 and 24,750/81800 would act as key support zones, while 25,210–25,300/82800-83000 could serve as key resistance levels for the bulls. However, below 24,750/81800, the uptrend would become vulnerable,” he added.

Ajit Mishra – SVP, Research, Religare Broking said that a decisive breakout above the 25,200 level could potentially take the Nifty towards the 25,400+ zone. He recommended a “buy on dips” strategy, with a strong emphasis on selective stock picking, especially in light of overbought conditions in certain segments.

(DISCLAIMER: The views and opinions expressed by investment experts on fortuneindia.com are either their own or of their organisations, but not necessarily that of fortuneindia.com and its editorial team. Readers are advised to consult certified experts before taking investment decisions.)

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