Both benchmark indices have gained more than 8% over six consecutive trading sessions, marking their longest winning streak in a year. According to market estimates, the rally has increased investors' wealth by around Rs 29 lakh crore.
The 30-share BSE Sensex closed at 79,310.01, gaining 2,008.61 points, or 2.60%. The NSE Nifty advanced 576 points, equivalent to 2.40%, to settle at 24,536.60. Broad-based buying across sectors pushed the Nifty 50 to a three-month high. The index had last traded above the 24,550 mark on August 7, when it stood at 24,570.65.
The latest gains extended the market's winning streak to six consecutive sessions. However, despite the recovery, the Nifty 50 and Sensex remain down 6.1% and 6.9%, respectively, in 2026.
Foreign investors have withdrawn a record billion from Indian equities this year, putting pressure on the rupee and prompting calls for tax concessions on equity investments. The latest market recovery has raised expectations that Indian stocks could begin reversing their underperformance against global markets.
The key question now is whether the rally can sustain its momentum. Several domestic and international factors are contributing to the surge, with expectations of relief on long-term capital gains (LTCG) tax emerging as one of the major drivers.
The Securities and Exchange Board of India (SEBI) has urged the government to consider removing LTCG tax for foreign investors. In a recent report, SBI Research recommended abolishing the tax for all classes of investors. Finance Minister Nirmala Sitharaman has also indicated that the government is open to hearing views on the issue.
Expectations of a possible tax concession have coincided with a significant return of foreign investors to Dalal Street.
On Wednesday, foreign investors purchased Indian shares worth Rs 72.84 billion ($769.65 million), marking their largest single-day investment in the domestic market since October 2025, according to provisional exchange data.
The latest figures show that foreign institutional investors (FIIs) have been net buyers of Indian shares worth Rs 39,404 crore over 13 trading sessions since October 16. The renewed buying follows a record sell-off that had taken foreign ownership of Indian stocks to historic lows.
Global brokerage Nomura believes India's relative attractiveness to foreign investors could improve further as corporate earnings strengthen, valuations remain below their post-pandemic averages and international headwinds begin to ease.
Improving corporate earnings have also contributed to the positive sentiment. According to ET, Nomura reported that normalised profit after tax for 134 companies in its BSE 200-plus universe increased 34% year-on-year in the second quarter of fiscal 2027. This was 18% higher than consensus estimates. Even after excluding the oil and gas sector, profit growth stood at 29%, exceeding expectations by 5%.
Market valuations have also become more favourable following the recent correction. Nomura noted that most sectors are trading below their respective post-pandemic average valuations, creating a more attractive entry point for foreign investors.
Developments in the United States have provided another boost to Indian equities. The Democrats secured control of both the US Senate and the House of Representatives in a decisive midterm election victory, raising hopes that the US-Iran war could move towards an end.
The election outcome is being viewed as a strong rebuke to President Donald Trump. His administration's global tariff policy and decision to launch a war in the Middle East had contributed to the weaker performance of the Indian stock market.
The Democratic sweep could support Indian equities by reducing concerns about sudden changes in US policy.
Vinod Nair, Head of Research at Geojit Investments Ltd, said the US midterm election verdict had given Indian equities fresh momentum. He attributed the rally to expectations that a more restrained Washington could create conditions for de-escalation in the Iran conflict and a shift in tariff policies.
He said the reduced threat of geopolitical escalation and energy supply disruptions had pushed crude prices lower. A retreat in US Treasury yields and the dollar had also eased pressure on India's inflation outlook and external accounts.
Nair added that improving market sentiment was supported by a consistent recovery in foreign investor buying and encouraging second-quarter earnings. The rally had also gained credibility as participation widened beyond the frontline indices.
The decline in crude oil prices has emerged as another significant positive for Indian markets. Brent crude has fallen around 10% to approximately $94 a barrel amid hopes that the US-Iran conflict could move towards a resolution.
Lower crude prices could ease pressure on India's inflation, import bill and current account. The decline is particularly significant because elevated oil prices and geopolitical tensions had contributed to the earlier wave of foreign investor selling.
Meanwhile, global semiconductor stocks and the US dollar came under pressure amid concerns about tighter scrutiny of AI data centres. Indian information technology stocks, which frequently move in the opposite direction to semiconductor shares, gained 2.4% during Thursday's session.
Market experts believe the current recovery could continue if favourable global conditions, particularly lower crude oil prices, remain in place.
Vatsal Bhuva, Technical Analyst at LKP Securities, said the rally in Indian equities appeared sustainable, supported by improving global factors such as Brent crude trading below $100, easing US 10-year Treasury yields and the ongoing reversal in global AI and semiconductor stocks.
He said the recovery was also gaining strength from FII buying and short covering as accumulated bearish positions were unwound. The Nifty's decisive move back above 24,000 during Thursday's session had further strengthened the outlook.
From a long-term perspective, Bhuva pointed to the Nifty's historical recoveries near its 50-month simple moving average (SMA), which currently stands at 22,485, compared with the current index level of 24,527. According to him, this indicates that the long-term trend support remains intact.
Bhuva expects the recovery to continue, with potential targets of 27,000-28,000 for the Nifty and 87,000-90,000 for the Sensex over the next 12 months.
Mayur Shah, PMS Fund Manager at Anand Rathi Advisors, described the current rally as a much-awaited recovery backed by strong corporate earnings and improving macroeconomic indicators.
He cited strong GST collections, automobile sales, electricity consumption data and credit growth as signs of momentum in capital expenditure.
Shah said global uncertainty had started to ease following the US election results, while crude oil remained below $100. He also pointed to the return of FIIs to the Indian market and the stabilisation of the rupee after its depreciation.
According to Shah, these indicators are pointing towards an upward trajectory for Indian markets. If the favourable conditions continue, the Nifty and Sensex could potentially surpass their all-time highs, he told TOI.
However, market experts have cautioned that the latest foreign investment figures do not yet establish a long-term reversal in overseas investor sentiment. Despite the encouraging recovery, it remains too early to conclude that foreign investors have returned to Indian equities for the long term.
VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, warned that profit booking could emerge at higher market levels as domestic institutional investors (DIIs) were showing an inclination to sell during rallies.
He also cautioned that the initial market reaction to the US election results could weaken, bringing renewed attention to the possibility of prolonged political conflict in the United States. Vijayakumar said Trump, given his political approach, could become a "Mr Veto" rather than a lame-duck president.
The latest rally has therefore brought renewed optimism to Indian equities, supported by foreign fund inflows, stronger corporate earnings, lower crude prices and improving global sentiment. However, whether the six-session winning streak develops into a sustained market recovery will depend on the continuation of these favourable conditions and the behaviour of foreign and domestic investors at higher levels.
About The Author
Comment List