Markets On Fire Ahead of Diwali, But What’s Really Fueling The Surge In Sensex & Nifty?

Mumbai: Indian stock markets witnessed a strong rally on October 16, as investor sentiment turned festive ahead of Diwali. Both Sensex and Nifty rose sharply, with the Sensex surging over 950 points to reach 83,560, while the Nifty jumped nearly 300 points to cross 25,600, trading at 25,620 by 2:30 PM. The broader markets also remained positive. The Nifty Midcap 100 rose by 0.55 percent, and the Nifty Smallcap 100 gained 0.25 percent.

Banking Stocks Push Markets Higher

One of the biggest reasons for today’s rally was the strong performance of banking stocks. The Bank Nifty bounced back after recent losses, showing signs of recovery. Axis Bank and AU Small Finance Bank were among the top gainers in the sector. Axis Bank saw strong buying interest after it reported healthy loan growth in the September quarter. Brokerage firm Bernstein gave Axis Bank an ‘outperform’ rating with a target price of Rs 1,250 per share.

Also, reports that the government may merge smaller public sector banks with bigger state-run banks further boosted investor confidence in the sector.

Positive Global Trends Boost Sentiment

Indian markets followed the strong cues from global markets, especially from Asia. Major Asian indices like Japan’s Nikkei 225, South Korea’s Kospi, and China’s Shanghai Composite traded higher, tracking overnight gains on Wall Street. The possibility of rate cuts by the US Federal Reserve and a positive global outlook ahead of Diwali gave a strong push to Indian equities.

India-US Trade Talks Bring Hope

Markets were also encouraged by news of upcoming India-US trade talks in Washington. A team led by Commerce Secretary Rajesh Agrawal will be discussing key topics, including energy trade. Experts believe that China’s restrictions on rare earth magnets are pushing the US to build stronger trade ties with India, which could result in a major trade deal.

FIIs and Rupee Strength Add to Gains

Foreign Institutional Investors (FIIs) were net buyers, investing Rs 68.64 crore, while Domestic Institutional Investors (DIIs) poured in a much larger Rs 4,650.08 crore. These investments added liquidity to the markets.

Meanwhile, the rupee strengthened by 40 paise, reaching Rs 87.68 per US dollar. A weaker US dollar, lower oil prices, RBI’s support, and strong equities all helped the rupee recover.