Nifty 50 to Sensex: Why is Indian stock market skyrocketing? Explained with 5 crucial reasons | Stock Market News

Stock market news: The Indian stock market ended higher in all trade sessions last week, which enabled the Nifty 50 and the BSE Sensex to register their biggest weekly gain in the previous four years. The Nifty 50 index went up from 22,397 to 23,350 levels, recording 953 points or 4.25% weekly gain. The BSE Sensex surged from 73,828 to 76,905 levels, logging over 3,000 points weekly gain or 4.16%. This stock market rally was participatory, as the broad market also witnessed strong buying last week. The BSE Small-cap index went up from 43,844 to 47,296 levels, recording a weekly gain of 3,452 points or 7.90%. The BSE Mid-cap index surged from 39,062 to 41,831, logging a weekly gain of 2,769 points or around 7.10%. So, it is clear that broad markets outperformed the front-line indices.

Why is the Indian stock market skyrocketing?

According to stock market experts, various factors supported this Indian stock market rally. However, they pointed out these top five reasons that enabled the sustained rally on Dalal Street last week: RBI rate cut buzz, better Q4FY25 earnings, stable Indian rupee, DIIs fiving befitting reply to FIIs, and stable Indian inflation outlook. They said that the uptrend on Dalal Street may continue next week with some profit-booking triggers as most Indian stocks are available at attractive valuations.

Top 5 reasons for Indian share market rally

1] RBI rate cut buzz: “After the US Fed rate cut guidance to cut US Fed rates twice in CY25, the market expects a rate cut by the Reserve Bank of India (RBI) next month in the upcoming RBI policy meeting. As the possible RBI rate cut would ensure more liquidity in the market, Dalal Street investors are discounting on this through the strong buying,” said Avinash Gorakshkar, Head of Research at Profitmart Securities.

According to the Morgan Stanley report published on Tuesday last week, India’s consumer price index (CPI) inflation is expected to average 4% in FY26, paving the way for a cumulative 75 basis points (bps) rate cut by the Reserve Bank of India (RBI)—an upward revision from the previously estimated 50 bps easing cycle.

2] Better Q4FY25 earnings: Gorakshkar said the signs of economic recovery are now visible as Fitch Ratings expects a pickup in capital spending over the next two financial years — FY26 and FY27. He said India’s real Gross Domestic Product or GDP growth slowed to 5.4% in the July–September 2024 quarter before rebounding to 6.2% from October to December 2024. Hence, the market estimates better Q4 results in 2025 sequentially.

3] Stable Indian rupee: Pointing towards the stable Indian National Rupee (INR), Dilip Parmar, Senior Research Analyst at HDFC Securities, said, “The Indian rupee has strengthened past the 86 mark against the US dollar for the first time since January, driven by a surge in foreign investments in the domestic capital and debt markets. The rupee’s gain was also supported by stronger-than-expected trade data and a rise in foreign exchange reserves following the Reserve Bank of India’s (RBI) USD/INR swap intervention. These factors together have helped bolster the local currency.” The HDFC Securities expert said the RBI’s efforts have paid off, with the rupee emerging as the top performer among Asian currencies this month.

4] DIIs fiving befitting reply to FIIs: Barring a few sessions in March 2025, DIIs are continuously buying in the cash segment. By the end of the Friday session last week, DIIs had bought shares worth ₹30,788.19 crore in the cash segment, while FIIs remained net sellers by selling Indian shares worth ₹15,412.13 crore. However, FIIs also started buying last week as they bought Dalal Street listed shares worth ₹5,819.12 crore cash last week.

“We expect this upward momentum to continue on the back of the foreign institutional investors’ return to the Indian market amid attractive valuations and signs of economic recovery,” said Siddhartha Khemka, Head of Research — Wealth Management at Motilal Oswal.

5] Stable Indian inflation: India’s CPI inflation declined to 3.61% in February 2025, marking the first time it fell below the RBI’s 4% target in six months. The Morgan Stanley report published last Thursday says lower trailing inflation, primarily due to easing food prices, has created space for additional rate cuts. The global brokerage firm expects India’s CPI inflation to average 4% in FY26, compared to its earlier forecast of 4.3%. For the January to March 2025 quarter, the Morgan Stanley report now projects CPI inflation to average 4%, down from its prior estimate of 4.5%. The brokerage added that since the RBI targets headline CPI within a 2-6% range, the current trend provides ample room for further easing.

Disclaimer: The views and recommendations provided in this analysis are those of individual analysts or broking companies, not Mint. We strongly advise investors to consult with certified experts, consider individual risk tolerance, and conduct thorough research before making investment decisions, as market conditions can change rapidly, and individual circumstances may vary.