The Indian stock market surged on Thursday, with the benchmark Sensex jumping over 700 points and the Nifty 50 reclaiming the important 26,000 level.
The powerful, broad-based rally was ignited by a wave of optimism following reports that a long-awaited trade deal between India and the United States could be imminent.
The bullish sentiment was so strong that it completely overshadowed a weaker trend in other Asian markets and an overnight fall in the US.
The BSE Sensex opened 727.81 points (0.86%) higher at 85,154.15, while the Nifty 50 rallied 188.60 points (0.73%) to open at 26,057.20.
Here are the key reasons why the Indian stock market is rising today:
A potential US-India trade deal fuels optimism
The primary catalyst for the market’s powerful ascent is the growing hope for a breakthrough in trade relations with the United States.
A report in the Mint newspaper, citing three people aware of the matter, suggested that a deal could be signed soon that would see the current, punishing 50% tariffs on Indian exports slashed to as low as 15 to 16%.
According to the report, India may agree to gradually reduce its imports of Russian oil as part of the agreement.
Heavy buying in IT shares provides a major boost
The rally was also given a significant boost by heavy buying across the information technology sector.
The Nifty IT index rose a formidable 2.4% after the US administration provided a crucial clarification on its controversial new H-1B visa fee.
The Trump administration clarified that recent international graduates and existing H-1B holders would be exempt from the new $100,000 levy, a major relief for an industry that relies heavily on the visa program.
A strengthening rupee adds another powerful tailwind
The bullish momentum was not confined to equities; it was powerfully reflected in the currency market, providing another tailwind for the rally.
The Indian rupee appreciated by 13 paise to trade at 87.80 against the US dollar in early trade.
According to reports, the rupee’s gain was directly supported by the same upbeat domestic equity sentiment and rising hopes of an imminent US-India trade deal that are driving the broader market.
A strengthening rupee is a key positive indicator for the market, as it often encourages foreign fund inflows and signals an improved risk appetite from global investors, providing another layer of support for the ongoing surge in equities.
A technical short-covering rally adds to the momentum
The market is also witnessing a technical short-covering rally after a period of recent consolidation.
This dynamic, where traders who had bet on a price decline are forced to buy back their positions, has the potential to further spike up large-cap stocks where there are significant short positions.
Textile stocks, which have been hit hardest by the US tariffs, are seen as particularly likely to witness a wave of buying if the trade deal buzz continues to grow.
Consistent FII buying provides a stable floor
Underpinning the rally is a period of consistent buying from Foreign Institutional Investors (FIIs). FIIs extended their buying streak for a fifth consecutive session on October 21, purchasing equities worth ₹96.72 crore.
This sustained foreign capital inflow has provided a stable floor for the market, even as domestic institutional investors have turned into net sellers.
This combination of powerful positive catalysts has given the bulls a clear reason to run, setting a confident and optimistic tone for the session.
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