Sensex zooms 1600 pts intraday; India m-cap tops ₹500 trn: Key reasons

Indian benchmark equity indices extended their winning streak for a sixth consecutive session on Thursday, supported by a sharp decline in crude oil prices, sustained foreign institutional investor (FII) inflows and developments following the US midterm elections.

The BSE Sensex opened at 78,910.94, gaining 1,609 points or 2.08 per cent, while the NSE Nifty 50 advanced 418 points or 1.74 per cent to begin trading at 24,378.05.

Buying momentum continued during the early session, with the Sensex touching an intraday high of 78,922 and the Nifty reaching 24,423.

At 9:50 am, the Sensex was trading 1,576 points, or 2.04 per cent, higher at 78,884. The Nifty 50 gained 454 points, or 1.90 per cent, to trade at 24,414.

Market optimism was reflected across sectors, with all major sectoral indices trading in positive territory. Nifty Auto, Financial Services, Realty and Cement gained more than 2 per cent each.

Broader markets also participated in the rally, with the Nifty Midcap 100 and Nifty Smallcap 100 advancing approximately 0.9 to 1.1 per cent.

The rally added around Rs 6.6 trillion to the market capitalisation of BSE-listed companies at the opening bell, taking the total valuation to Rs 501.1 trillion, compared with Rs 494.4 trillion in the previous session.

Key Factors Driving the Sensex and Nifty Rally

1. Sharp Decline in Crude Oil Prices

The fall in international crude oil prices emerged as one of the biggest drivers of Thursday’s rally.

Brent crude futures plunged more than 10 per cent, slipping below the $100-per-barrel mark amid hopes of reduced geopolitical tensions following the US midterm elections.

At the latest available levels, Brent crude was trading 0.49 per cent lower at $94.09, while West Texas Intermediate (WTI) crude declined 0.82 per cent to $87.40.

The prospect of easing restrictions in the strategically important Strait of Hormuz also supported sentiment. According to a PTI report, Iran had exempted commercial vessels from four countries, including India, from certain transit restrictions.

Devarsh Vakil, head of prime research at HDFC Securities, said the sharp decline in energy prices was providing support to equity markets.

He attributed the fall in crude prices to changing political dynamics in the United States and expectations of de-escalation in the conflict involving Iran.

2. Hopes of De-escalation in the US-Iran Conflict

Investors are also assessing the potential implications of the Democratic victory in the US midterm elections for the ongoing Iran conflict.

Market experts believe the shift in political power in Washington could increase pressure for a reassessment of the US approach to the conflict, which has disrupted global energy markets and pushed up oil and gas prices.

US President Donald Trump told the Financial Times that he had no immediate plans to escalate military operations in West Asia.

Vice President JD Vance, meanwhile, directly attributed the Republican election losses to the war.

VK Vijayakumar, chief investment strategist at Geojit Investments, said the approximately 10 per cent decline in Brent crude was a major positive for financial markets.

He noted that expectations of a possible resolution to the US-Iran conflict had contributed to the improvement in investor sentiment.

Ankita Pathak, head of global investments at Ionic Asset, said the period following US midterm elections has historically been favourable for equity markets.

She added that inflation, bond yields, the dollar and developments involving the US and Iran would remain important factors influencing market direction.

3. Expectations of Progress in India-US Trade Negotiations

The US election outcome has also raised expectations that India could gain greater negotiating space in its trade discussions with Washington.

Analysts believe increased congressional scrutiny of the Trump administration’s trade policies could potentially limit the scope for unilateral tariff measures.

Richard Rossow, senior adviser and chair on India and Emerging Asia Economics at the Centre for Strategic and International Studies (CSIS), said the election results could increase congressional oversight of the President’s trade policies.

However, Trump may also face pressure to accelerate negotiations and conclude trade agreements with major economic partners, including India.

Tanay Dalal, senior vice-president of economic research at Axis Bank, said the Republican setback was more significant than many observers had anticipated, with several traditionally Republican strongholds shifting towards Democrats.

He also suggested that a more fragmented approach to artificial intelligence regulation in the United States could benefit India by supporting demand for outsourced technology and business services.

4. Strong Foreign Institutional Investor Inflows

Sustained foreign institutional investor buying has provided another important boost to domestic equities.

According to exchange data, foreign institutional investors purchased Indian shares worth more than Rs 17,000 crore during the first three trading sessions of the week.

Vijayakumar said falling crude prices, the resilience of the Indian economy and improving corporate earnings had contributed to a change in foreign investors’ approach towards Indian equities.

He also referred to expectations surrounding a possible reduction or removal of the long-term capital gains (LTCG) tax in the upcoming Union Budget as another factor influencing market sentiment.

5. Improving Technical Outlook for Nifty 50

Technical indicators also suggest that the market’s upward momentum remains intact, according to market analysts.

Pabitro Mukherjee, deputy vice-president of research at Bajaj Broking, said the Nifty’s ability to sustain levels above 24,000 could support another upward move towards 24,400 and 24,700 in the coming trading sessions.

He said a formation of lower highs and lower lows on the daily chart would indicate a possible pause in the ongoing rally.

Mukherjee also revised the Nifty’s short-term support zone upwards to 23,200-23,400, identifying the 50-day exponential moving average (EMA) and the current week’s breakout area as important technical levels.

According to him, holding above this support range would keep the broader market outlook positive.

Market Outlook

The continued decline in crude oil prices, improving foreign investor participation and expectations of easing geopolitical tensions have strengthened sentiment in Indian equity markets.

However, investors will continue to monitor developments in West Asia, global inflation, bond yields, currency movements and India-US trade negotiations.

For now, the six-session rally reflects improving confidence among market participants, although the sustainability of the upward momentum will depend on whether these favourable global and domestic factors continue.