Sensex jumps 4,300 points in 4 days: What's driving rally?
What's the story
The Indian stock market has witnessed a major upturn, with the Nifty and Sensex indices climbing nearly 9% since their April 7 lows. The Sensex has gained 4,300 points in the last four days, including an impressive 1,483 points today alone to hit a high of 78,534. Meanwhile, Nifty added 1,350 points during the period. The surge is attributed to a mix of factors including easing trade tensions and strong domestic inflows.
Market performance
Sensex and Nifty outperform global peers
India's stock market has outperformed its Asian and Western counterparts in the past few weeks. This is thanks to a rally in the financial sector, supported by rate cuts from the Reserve Bank of India (RBI) and falling inflation rates. The indices rose by up to 1.9% at their peak today, marking a positive turn for CY25.
Sector analysis
Financial sector leads recovery
The financial sector has been the mainstay of the recent market recovery, after RBI's consecutive repo rate cuts. A fall in retail inflation due to declining vegetable prices has increased hopes for another rate cut. This hope has triggered a massive rally in banking stocks like HDFC Bank, ICICI Bank, Kotak Mahindra Bank, and State Bank of India. The Nifty Bank is trading close to its all-time high of 54,467 points.
Investor behavior
International investors drive market rebound
The combination of domestic factors and reduced trade tensions has prompted investors to buy heavily, taking advantage of sharp corrections. This buying spree has led to a significant rebound in the Indian stock market. Foreign Portfolio Investors (FPIs) have also turned net buyers in recent trading sessions, contributing to the recovery of most recent losses in Indian stocks.