Bulls drive biggest surge in indices since February 4; Nifty 50 in positive territory

Indian stock markets surged with both the NSE Nifty 50 and BSE Sensex rising by more than 1.5%, marking their highest gains in over a month. The rally was fueled by strong buying from both domestic and foreign investors, helping the broader smallcap and midcap indices join the positive momentum.

By the close of the day, the Sensex stood at 75,301.26, up 1.5%, while the Nifty 50 ended at 22,834.30, also up 1.5%. The Nifty Smallcap 250 and Nifty Midcap indices soared by 2.7% and 2.18%, respectively, with the market gaining ₹7 trillion, according to BSE data. This was the biggest increase since February 4, when the indices had risen by around 1.6%. The Nifty 50 has now ended in positive territory five times this month in just 11 trading days.

The rally was also supported by institutional buying, with domestic institutional investors (DIIs) net purchasing ₹2,534 crore worth of equities and foreign institutional investors (FIIs) buying ₹695 crore worth.

Analysts remain cautiously optimistic, noting that the Nifty 50 has fallen by over 10% in the past six months, but there are signs of recovery due to favorable fiscal and monetary conditions. Experts anticipate strong Q4 FY25 earnings that could lift market sentiment, alongside the potential for rate cuts due to lower inflation. Positive economic signals, such as strong GST collections and improving industrial production, further support the outlook.

Market expert Kunal Parar from Choice Equity Broking pointed out that nearly 80% of Nifty 50 stocks are trading below their 200-day moving average, indicating an oversold market. He suggested that while the bounce-back is encouraging, the Nifty 50 needs to remain between 22,500–22,700 for gains to hold.

Dhiraj Relli, MD & CEO of HDFC Securities, emphasized that the sharp market correction had reset valuations to more attractive levels, bringing India’s market premium over emerging markets down to about 50%, a historical average.

Looking ahead, Neelesh Surana, CIO at Mirae Asset, expects fiscal and monetary support to drive GDP recovery in the coming quarters. He anticipates a 75 basis point interest rate cut this year, with further reductions as inflation cools.

Veteran market expert Ajay Bagga believes that the six-month market slump is a temporary setback, with funds likely to flow back into the markets as India’s recovery gains momentum.

Additionally, Aniruddha Sarkar, CIO at Quest Investment Advisors, suggested that FIIs may reduce their outflows as US bond yields cool and global concerns, like a US slowdown, drive investors towards India’s stronger growth prospects.

Prabhakar Kudva of Samvitti Capital emphasized focusing on businesses with sharp earnings growth, particularly in midcaps and smallcaps, where higher risk could yield greater returns.

Standard Chartered’s investment strategy report expects short-term volatility, but maintains a positive outlook for domestic equities over the next year, citing reasonable valuations and improving growth cycles.

The day's rally was led by heavyweights like ICICI Bank, HDFC Bank, Larsen & Toubro, Mahindra & Mahindra, Infosys, and Kotak Mahindra Bank, all contributing to the strong performance of the headline indices.