The Indian stock market benchmarks—the Sensex and the Nifty—witnessed strong gains on Thursday, and closed in positive territory for the fourth consecutive session.
The 30-share pack Sensex opened at 76,968 against its previous close of 77,044 and surged 1,572 points to hit an intraday high of 78,617. The Nifty 50 started the day at 23,402 against its previous close of 23,437 and jumped nearly 2 percent to an intraday high of 23,872.
The Sensex finally closed at 78,553, up 1509 points, or 1.96 percent, while the Nifty settled at 23,852, up 414 points, or 1.77 percent.
Considering Thursday's close, the Sensex has surged over 4,706 points in the last four days, while the Nifty has gained over 1,453 points or nearly 6.5 percent.
Experts highlight the following five crucial factors that appear to be driving the Sensex and the Nifty higher. Take a look:
1. Hopes of a trade deal with US
The Indian stock market is riding on hopes of favourable trade negotiations between India and the US. Earlier, media reports suggested that US President Donald Trump may announce additional tariff exemptions after a 90-day pause on reciprocal tariffs.
"Things are expected to normalise quickly. India is likely to reach a favourable trade agreement with the US. The Nifty reclaiming the 24,000–25,000 levels in the next two to three weeks is very much a possibility," said Pankaj Pandey of ICICI Securities.
Moreover, experts believe that Trump's tariff policies will not have as severe an impact on India as they will have on countries like China.
"The recent global tariff changes have added uncertainty to markets, but India is better positioned than before. With lower exposure to US trade and strong domestic demand, the direct impact remains manageable," said Rahul Singh of Tata Asset Management.
2. Macro-economic factors
Recent macro prints have boosted domestic market sentiment. India's retail inflation, based on the Consumer Price Index (CPI), rose by 3.34 percent annually in March, lower than the 3.61 percent registered in February and 4.85 percent reported in the year-ago period. Retail inflation fell to its slowest pace in over six years (since August 2019).
The Reserve Bank of India expects retail inflation to stay at 4 percent in 2025-26. GDP growth is also expected to remain above 6 percent. RBI projects India's GDP growth at 6.5 percent for FY26.
"Most macro indicators are positive—be it inflation, crude oil prices, or GDP projections. So, things are largely in place for us. Geopolitically as well, India is in a position to benefit from the ongoing trade war between the US and China," said Pandey.
3. Forecast of a bountiful monsoon
The expectation of a healthy monsoon is another factor which has supported market sentiment.
The India Meteorological Department (IMD) has predicted above-normal cumulative rainfall during this year's monsoon season. The monsoon plays a significant role in India's economy. Normal monsoons could increase earnings for those employed in the rural sector. They also help keep inflation under control, which raises the prospects of rate cuts by the Reserve Bank of India (RBI).
4. FPIs resume buying
Foreign portfolio investors (FPIs) have resumed buying Indian equities, influencing market sentiment. Data show that in the last two consecutive sessions, FPIs cumulatively bought Indian equities worth ₹10,000 crore in the cash segment.
FPIs have resumed buying Indian stocks amid a pause in Trump's tariffs. Moreover, the prospects of a trade deal with the US and a healthy economic growth outlook also seem to have attracted foreign investors towards the Indian stock market.
5. Strong gains in banking
Healthy gains in banking stocks drove the Sensex higher on Thursday. Select banking heavyweights, including ICICI Bank, SBI, Kotak Mahindra Bank, Axis Bank, HDFC Bank traded among the top gainers, rising 2-4 percent, in the Sensex index.
The Nifty Bank index jumped 2.21 percent to close at 54,290.20. The index is inching closer to its record high of 54,467.35, which it hit on September 26 last year.
Banking stocks carry significant weight in the benchmark indices, and strong gains in them give a solid boost to overall market performance.
(By arrangement with livemint.com)
