Indian stock markets ended the week on a spectacular note on Friday, with the benchmark indices extending their winning streak to a seventh consecutive session and defying a sharp sell-off in global markets. The 30-share BSE Sensex surged 1,718.01 points, or 2.17 per cent, to settle at 81,028.02, while the 50-share NSE Nifty rallied 493.75 points, or 2.01 per cent, to close at 25,030.35, reclaiming the psychologically important 25,000 mark and hitting a nine-month high.
The rally, the seventh straight day of gains for both indices, was the first such streak in three years, and it capped a remarkable week for Indian equities. Over the seven sessions, the Sensex has surged 7,781.99 points, or 10.62 per cent, and the Nifty has rallied 2,331.5 points, or 10.27 per cent. In the week alone, the Nifty gained 8.6 per cent and the Sensex rose 8.8 per cent, their strongest weekly performance since February 2021.
The total wealth of investors in BSE-listed firms rose by about 30 lakh crore rupees in a single week of gains.
Friday's session was driven by heavy buying in banking heavyweights and select stocks that reported strong quarterly earnings, with foreign institutional investors pouring money into Indian equities even as global markets reeled. Both indices settled at the day's high, a sign of the strength of the buying interest, and the breadth of the rally suggested that investors were betting on the resilience of the Indian economy at a time of considerable global uncertainty.
The immediate trigger for the surge was the scale of foreign buying. Foreign institutional investors bought Indian equities worth 14,974.68 crore rupees on Thursday, according to exchange data, marking their biggest single-day purchase since 24 February 2021. The sustained inflow of foreign money has been the backbone of the seven-day rally, and it continued on Friday as global funds looked past the turmoil in overseas markets and towards India's growth prospects.
Easing crude oil prices provided a second tailwind. Brent crude, the international benchmark, fell by about 1.5 per cent to 96.82 dollars a barrel, reducing concerns about India's import bill and about inflation. India imports the bulk of the crude oil it consumes, and lower oil prices are generally positive for the country's economy, its currency and its stock markets, since they ease pressure on both the trade deficit and on the costs faced by companies and consumers.
Banking stocks led the advance on Friday, with the Nifty Bank index climbing 1,312 points to close at 59,086, reflecting strong buying in the country's largest lenders. Mahindra and Mahindra emerged as the top gainer on the Nifty 50, supported by strong second-quarter earnings that reassured investors about demand in the automobile sector and about the broader health of corporate India.
The earnings season, which has so far delivered healthy numbers from several large companies, has given the market a fundamental anchor for the rally.
Not every part of the market shared in the gains. The Nifty Midcap index, which tracks medium-sized companies, slipped 14 points to close at 60,607, suggesting that the buying was concentrated in large, blue-chip stocks rather than spread evenly across the market. That pattern is typical of rallies driven by foreign investors, who tend to favour the most liquid, well-known names.
What made Friday's rally particularly striking was the contrast with global markets. Overseas, equities were under pressure after the outcome of the midterm elections in the United States and a sharp sell-off in technology and artificial intelligence stocks, which wiped trillions of dollars off the value of the Nasdaq 100.
Indian markets, however, moved in the opposite direction, a divergence that analysts attributed to the strength of domestic buying, the scale of foreign inflows and the perception that India's economy is better placed than many others to withstand global turbulence.
The Nifty's close above 25,000 was a milestone in itself. The index had not closed above that level since 27 February this year, and its return to the mark, at a nine-month high, signals that the market has recovered the ground lost during months of volatility earlier in the year. For the Sensex, the close at 81,028.02 was also the day's high, underlining the momentum behind the move.
The seven-day rally has been the longest winning streak for the Sensex in 26 months and for the Nifty in 14 months, according to market data, and it has changed the mood among investors after a period in which the market had struggled for direction. The gains have been broad enough to lift the wealth of retail investors as well, with many portfolios recovering losses from earlier in the year.
Analysts caution, however, that markets rarely move in a straight line, and that the pace of the recent gains means that some volatility cannot be ruled out. The factors that have driven the rally, foreign inflows, easing oil prices and strong corporate earnings, are all subject to change, and global markets remain unsettled.
But for now, the fundamentals supporting Indian equities appear robust: a growing economy, a central bank that has managed inflation, and a corporate sector that is reporting healthy profits.
The rally also has wider significance for the Indian economy. A rising stock market boosts the wealth of millions of retail investors who have entered the market in recent years, supports the government's disinvestment and listing plans, and signals confidence in the country's economic direction.
The record participation of domestic retail investors, through mutual funds and direct equity holdings, has given the market a cushion of domestic buying that was absent in earlier cycles, and that cushion has helped Indian markets hold up even when foreign investors have sold.
As the new week begins, investors will watch whether the foreign buying continues, whether crude oil prices remain subdued, and whether the remaining quarterly results live up to expectations. The global backdrop, including the political situation in the United States and the direction of technology stocks, will also matter.
But after seven straight days of gains and a weekly performance not seen in more than five years, the Indian market has given its investors a week to remember, and a reminder of why it has become one of the most closely watched emerging markets in the world.
(Reporting based on Deccan Herald, CNBC-TV18 and Moneycontrol.)