Investors Gain Rs 29 Lakh Crore as Sensex and Nifty Surge Over 8%
Indian equity markets experienced their most significant single-day surge in seven months on Thursday, buoyed by a drop in oil prices following the Democrats’ decisive victory in the U.S. midterm elections. The BSE Sensex soared nearly 2,009 points, while the NSE Nifty climbed 576 points, marking a broad-based rally across sectors. This upward momentum has resulted in a market capitalization increase of approximately Rs 29 lakh crore, with both indices enjoying their longest winning streak in a year, gaining over 8% in six consecutive trading sessions.
Factors Driving the Rally
Several elements are propelling this rally, with expectations of relief on long-term capital gains (LTCG) tax being the most significant. The Securities and Exchange Board of India (SEBI) has suggested that the government consider abolishing LTCG tax for foreign investors, while SBI Research has called for its removal for all investors. Finance Minister Nirmala Sitharaman has indicated a willingness to discuss the matter, which has rekindled interest from foreign investors. On Wednesday, foreign investors purchased shares worth Rs 72.84 billion ($769.65 million), marking their largest single-day investment since October 2025.
Foreign institutional investors (FIIs) have been net buyers of Indian shares worth Rs 39,404 crore over 13 trading sessions since October 16. This renewed interest follows a record sell-off that had reduced foreign ownership of Indian stocks to historic lows. Global brokerage Nomura notes that India’s attractiveness to foreign investors is likely to improve as corporate earnings rise and valuations remain below post-pandemic averages.
Market Sentiment and Global Influences
The recent rally has been further supported by a decline in crude oil prices, which have dropped around 10% to approximately $94 a barrel. This decrease is attributed to hopes for a resolution in the U.S.-Iran conflict, which had previously contributed to elevated oil prices and geopolitical tensions affecting the Indian market. Vinod Nair, Head of Research at Geojit Investments Ltd, stated that the U.S. midterm election results have provided fresh momentum to Indian equities, easing concerns over sudden shifts in U.S. policy.
Additionally, the performance of Indian information technology stocks has improved, gaining 2.4% during the session as global semiconductor stocks faced pressure. The ongoing recovery in foreign investor buying and encouraging second-quarter earnings have also bolstered market sentiment.
Sustainability of the Rally
Market experts suggest that the current rally could be sustainable if global factors, particularly crude oil prices, remain favorable. Vatsal Bhuva, a Technical Analyst at LKP Securities, believes that the rally is supported by improving global conditions, including Brent crude prices below $100 and easing U.S. Treasury yields. He noted that the Nifty’s recovery above 24,000 strengthens the outlook.
Mayur Shah, PMS Fund Manager at Anand Rathi Advisors, emphasized that the rally is backed by strong corporate earnings and positive macro indicators. He pointed out that global uncertainty has diminished following the U.S. elections, with key indicators suggesting a positive trajectory for the Indian market. However, Nomura cautions that the recovery in foreign flows remains vulnerable to risks such as elevated crude oil prices and geopolitical uncertainties.
