The Indian stock market benchmark indices, Sensex and Nifty 50, opened with strong gains on Thursday, led by optimism over reports of a likely India-US trade deal soon. Despite weakness in Asian markets and an overnight fall in the US stock market, the domestic equity market surged amid buying across the board.
The BSE Sensex opened 727.81 points, or 0.86%, higher at 85,154.15, while the Nifty 50 rallied 188.60 points, or 0.73%, to open at 26,057.20. Broader markets were mixed, as the Nifty Midcap 100 index gained 0.2%, while the Nifty Smallcap 100 index was down 0.1%. index traded 0.5% higher above 58,200 level.
Among sectors, Nifty IT, Nifty Private Bank, Nifty FMCG, and Nifty Metals witnessed strong gains, while the Nifty Realty and Nifty Oil & Gas sectors were in the red.
Meanwhile, both the benchmark and Sensex indexes have jumped about 3% in the previous five sessions, aided by stable Q2 results from banks and heavyweights such as Reliance Industries.
“Reports of an imminent trade deal between India and US is doing the rounds in market circles and the market reaction through Nifty 50 open confirms this. If the reported 15-16% tariffs on Indian exports to US materialises that would be a big positive for the Indian economy and a major boost to stock markets. The market rally which has already begun in the festival season will accelerate enabling the Nifty 50 to set new record highs,” said Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments.
Unprecedented record sales during the last few days has the potential to improve corporate earnings. FIIs turning buyers recently and short covering are factors that can fuel the rally. Clearly, it is advantageous for bulls, he added.
Here are five key reasons why Indian stock market is rising today:
India-US Trade Deal
India and the US are likely to sign a soon that could slash the current tariffs for Indian exports to 15% – 16% from 50%, Mint reported, quoting three people aware of the matter. According to the report, India may agree to gradually reduce its imports of Russian oil, with energy and agriculture emerging as key talk points in the deal.
Upbeat Q2 Results
The decent Q2 results by some of the index heavyweights such as Reliance Industries improved investors risk-appetite. Analysts expect the earnings trajectory should bottom out, with a H2FY26 recovery likely on the back of the consumption recovery. Nifty EPS downgrades stabilized in the last one month with a small 1% uptick.
Consensus expectations for FY27 remain optimistic at 15%, partly led by the turnaround banks and energy. The street is also building in a robust recovery in staples.
Heavyweights Lead
Rally in index heavyweights, especially IT stocks, lifted the benchmark Nifty 50 above 26,000 level and Sensex above 85,000-mark. , HCL Technologies, , Axis Bank, , , Hindustan Unilever, among others rose over a percent each.
FII Buying
The Foreign Institutional Investors (FIIs) extended their buying streak for the fifth consecutive session on October 21, as they bought equities worth ₹96.72 crore, while Domestic Institutional Investors (DIIs) turned net sellers, offloading equities worth over ₹607.01 crore on the same day.
Short-Covering
The Indian stock market is also witnessing a short-covering rally after its recent consolidation. This short-covering has the potential to spike up large caps where there are big short positions. Textile stocks, which bore the brunt of the penal tariffs, are likely to witness big buying amid India-US trade deal buzz.
On the technical front, high momentum as confirmed by oscillators have been successful in letting Nifty 50 trade close to the upper bollinger band on consecutive days.
“In this construct, bearish candles formed in the last two days could get ignored initially, before precipitating into a sharp reversal. For now, upside objective is set at 26,186, with 2,6800 appearing as an optimistic objective. Meanwhile, downside marker is placed at 257,80, but an outright reversal is not expected today,” said Anand James, Chief Market Strategist, Geojit Investments Limited.
Stock Market Outlook
In the current environment of heightened volatility and mixed market cues, traders are advised to maintain a cautious “buy-on-dips” approach, particularly when using leverage, said Amruta Shinde, Technical & Derivative Analyst at Choice Broking.
‘Booking partial profits during rallies and maintaining tight trailing stop-losses is recommended to manage risk effectively. Fresh long positions should be considered only if the Nifty sustains above the 26,200 mark. While the broader market undertone remains cautiously bullish, close monitoring of key technical levels and global developments will be crucial in the sessions ahead,” Shinde said.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.