The Indian stock market extended its gains for a second consecutive session on May 26, with benchmark indices climbing sharply. The Sensex rose by over 450 points, while the Nifty reclaimed the psychologically important 25,000 mark.
The Sensex opened at 81,928.95, up from its previous close of 81,721.08, and surged more than 771 points—or nearly 1 percent—to an intraday high of 82,492.24. The Nifty began the day at 24,919.35 versus its previous close of 24,853.15 and touched an intraday peak of 25,079.20, also gaining close to 1 percent.
By the end of the session, the Sensex settled 455 points, or 0.56 percent, higher at 82,176.45, while the Nifty closed up 148 points, or 0.60 percent, at 25,001.15.
The BSE Midcap and Smallcap indices also recorded healthy gains, rising 0.56 percent and 0.48 percent, respectively.
The total market capitalisation of companies listed on the BSE rose to nearly ₹445 lakh crore from about ₹442 lakh crore in the previous session—an increase of roughly ₹3 lakh crore, enhancing investor wealth significantly.
Here are five key factors that appear to have buoyed domestic market sentiment:
1. Trump postpones EU tariffs
In a significant relief for the European Union (EU), US President Donald Trump delayed the proposed 50 percent tariff on EU imports from the original date of June 1 to July 9.
“The Indian stock market is rising today largely due to improved global sentiment after President Trump deferred the steep tariffs on EU imports. This has lifted sentiment across Asian markets, and India is benefiting from the global rally,” said Trivesh D of Tradejini.
Given that the EU is a key trading partner for India—and that several Indian goods are routed through the EU for exports to the US—the move has eased fears of an imminent trade war and signals a willingness for dialogue on trade policy.
2. RBI’s bumper dividend
On May 23, the Reserve Bank announced a record dividend of ₹2.69 lakh-crore to the central government for the financial year 2024–25 (FY25). This is the highest-ever surplus payout by the central bank.
Experts say the dividend will significantly strengthen the government’s fiscal position and aid efforts to contain the fiscal deficit target for FY26 at 4.4 percent.
“RBI’s bumper dividend, which exceeds budget expectations, will help keep the FY26 fiscal deficit in check at 4.4 percent. This supports a low-inflation and falling interest rate environment—factors that are favourable for equities,” said VK Vijayakumar of Geojit Financial Services.
The US dollar index has been on a downward trend for three consecutive sessions, trading near one-month lows. This has bolstered investor appetite for emerging markets such as India.
A weaker dollar tends to encourage foreign capital inflows into Indian equities, further supporting the market’s upward momentum.
4. Macroeconomic positives
India’s macroeconomic fundamentals remain strong, supporting the long-term growth trajectory of its equity markets. With inflation softening, the RBI has room for potential interest rate cuts. Meanwhile, India is expected to maintain its position as one of the fastest-growing major economies.
“Investor confidence has been buoyed by solid Q4 earnings, the RBI’s record dividend, and confirmation that India is now the fourth-largest economy globally,” said Trivesh.
5. Surge in retail participation
The domestic market is also experiencing a wave of retail investor participation—an important driver of sustained upward movement.
“New retail investors continue to enter the market. Just last week, over 600,000 new investors made their debut in capital markets. We remain confident about the long-term prospects for Indian equities,” said G Chokkalingam, Founder and Head of Research at Equinomics Research Private Limited.
(By arrangement with livemint.com)