Sensex gains nearly 800 points: What is behind today's rally?
What's the story
The Indian stock market is witnessing a strong rally for the third consecutive session, with the benchmark Sensex jumping nearly 800 points and the Nifty 50 reclaiming the 25,900 mark. The Sensex gained 781 points, or nearly 1%, to hit an intraday high of 84,652, while the Nifty 50 rose by nearly 1% to an intraday high of 25,934.55. The BSE Midcap and Smallcap indices also witnessed gains of up to a percent during today's trading session.
Market drivers
Optimism over potential India-US trade deal boosts market
The current rally in the Indian stock market can be attributed to several key factors. First, there is optimism about a potential India-US trade deal being announced in the coming days. US President Donald Trump has indicated that tariffs on India will be "very substantially" reduced, which could boost sectors like textiles and jewelry. Additionally, this development signals an easing of tensions over New Delhi's Russian oil purchases.
Political impact
Anticipation of end to US government shutdown
The Senate passed legislation on Monday to reopen the US government, raising hopes that the longest shutdown in history will end soon. The government's reopening will allow the release of key data, offering insights into US economy's health. Markets anticipate that the return of this data could strengthen the case for a rate cut in December. The exit polls for Bihar Assembly Elections 2025 also suggest that NDA may continue to rule in Bihar, which could further boost market sentiment.
Economic stability
Global brokerage upgrades Indian stock market rating
India's strong growth-inflation dynamics have also contributed to market sentiment, shielding it from a crash despite heavy foreign capital outflows amid US tariffs and global headwinds. Global brokerage Goldman Sachs recently upgraded its rating for the Indian stock market to "overweight" from "neutral," citing strengthening earnings momentum and policy tailwinds supporting growth. The stable Q2 earnings season with no negative surprises has also been positive for the market, experts say.