Sensex, Nifty 50 Soar Over 4.5% in Best Week Since 2020 as FIIs Return and Rate Cut Hopes Surge
The Indian stock market staged a powerful comeback last week, delivering its strongest weekly performance in more than four years. In a holiday-shortened trading window, benchmark indices Sensex and Nifty 50 surged over 4.5%, fueled by a blend of positive domestic cues and supportive global sentiment.
FIIs Make a Strong Comeback, Powering the Bulls
Foreign institutional investors (FIIs), whose sustained selling had weighed on the markets in recent months, made a decisive return to Indian equities. Their renewed buying interest was one of the biggest catalysts behind the rally, bringing much-needed cheer to Dalal Street. The return of foreign capital boosted investor confidence and added momentum to a market that had been looking for positive triggers.
Policy Optimism and Global Trade Relief Fuel Risk Appetite
Market sentiment got an additional lift as global trade tensions showed early signs of cooling. Optimism around the deferral of tariffs and the extension of exemptions on select products raised hopes that negotiations could reduce the impact on global commerce. This helped Indian equities decouple from broader Asian peers, many of which remained subdued amid trade uncertainty and concerns over slowing global growth.
Domestic Macro Boost: Inflation Dips, Monsoon Normal, and Rate Cut Bets Rise
The domestic macro environment added fuel to the rally. A key highlight was the drop in retail inflation, which fell to its lowest level in nearly six years. This development sparked speculation that the Reserve Bank of India (RBI) could go for a third rate cut, a move that would support credit growth and corporate profitability.
Additionally, news of a normal monsoon forecast provided relief across sectors like agriculture, FMCG, and rural-focused stocks. With no major negative surprises from global markets, traders capitalized on the positive momentum.
Sensex and Nifty Erase YTD Losses, Financials Lead the Charge
The rally saw the benchmark BSE Sensex jump 4,706.05 points, or 6.37%, to close at 78,553.20. Meanwhile, the NSE Nifty 50 surged by 1,452.5 points, or 6.48%, settling at 23,851.65—its highest close of the week. Notably, both indices have now erased all of their year-to-date losses.
Despite the rebound, the benchmarks remain around 9% below their record highs from late September, suggesting further room for upside if the positive triggers sustain.
Investors Add ₹25.77 Lakh Crore in Wealth in Four Days
The rebound brought massive gains to investors, with market capitalization soaring by ₹25.77 lakh crore in just four sessions. The total valuation of BSE-listed companies now stands at ₹4,19,60,046.14 crore (USD 4.90 trillion), highlighting the magnitude of the wealth creation.
Heavyweight Financials Shine as Banks Cut Deposit Rates
Financial stocks, especially top-tier banks, were the clear outperformers. Lower deposit rates announced by major lenders boosted prospects of healthier net interest margins (NIMs), setting the stage for improved earnings. ICICI Bank jumped 7.2%, and HDFC Bank rose 5.5%, both hitting record highs ahead of their Q4 earnings announcements.
With investors betting on continued rate easing and a favorable policy environment, the financial sector remains a key driver of market optimism going forward.
