Sensex jumps 1,600 points: What's driving today's stock market rally?
What's the story
The Indian stock market witnessed a massive rally on Friday, with the Nifty50 index opening at 22,695 and hitting an intraday high of 22,923. The Sensex opened at 74,835 and touched an intraday high of 75,467, gaining over 1,600 points during the intraday. The Bank Nifty opened with a gap-up at 50,634 and surged to an intraday high of 51,244. The rally is largely due to US President Donald Trump's announcement of a temporary halt on tariffs imposed on India.
Market trends
Strong buying activity in broad markets
The Indian stock market's rally wasn't just restricted to the top indices. The BSE Small-cap index and Mid-cap index also gained significantly, rising over 2.75% and 2%, respectively. By 1:30pm, as many as 403 BSE-listed stocks had touched their circuit limits, out of which 268 stocks had hit the upper circuit.
Market drivers
Trump's tariff pause and RBI's repo rate cut
Today's rally in the Indian stock market has largely been driven by Trump's decision to delay the imposition of reciprocal tariffs on all trading partners (except China) by 90 days. Profitmart Securities Head of Research Avinash Gorakshkar said this has fueled buying on Dalal Street during early morning trades. A 25 basis points (bps) cut in repo rate announced by Reserve Bank of India (RBI) on Wednesday is also adding to this bullish sentiment.
Economic outlook
RBI's inflation prediction and market liquidity
The RBI's prediction of 4% inflation in FY26 and its decision to maintain liquidity in the market by reducing the repo rate, both have contributed to today's market surge. Anshul Jain, Head of Research at Lakshmishree Investment and Securities, said these factors are playing a big role in today's rally. The central bank has managed to keep inflation under control despite global triggers like Trump's tariff induced economic recession concerns.
Market corrections
Short-covering and expectations for Q4 results
Indian stock markets bounced back strongly on Friday after a weak Wednesday. Traders rushed to close bearish positions still open from midweek, triggering a sharp rise across NSE and BSE indices. This wave of short covering drove some of the gains today. Adding to the optimism, expectations are high for strong Q4 results in 2025, especially from banks, following the RBI's recent rate cut.