Stock markets will reopen for trading on Thursday after a two-day Diwali break, with investors eyeing whether the festive momentum and renewed optimism can lift benchmark indices, the Sensex and Nifty, to new record highs.
Gift Nifty futures were trading at 26,260 points as of 7:40 a.m., indicating a strong start for the Nifty 50. This points to an opening above Tuesday’s one-year high close of 25,868.6 and close to its all-time peak of 26,277.35.
Both the Sensex and Nifty have rallied about 3% in the past five sessions, supported by firm earnings from leading banks and large companies such as Reliance Industries. Analysts say positive investor sentiment, boosted by festive season demand, tax reliefs, and a favourable policy environment, could continue to support the uptrend in the short term.
India’s retail industry recorded its biggest-ever festive season sales this year, with Diwali business touching Rs 5.40 lakh crore in goods and Rs 65,000 crore in services, according to a nationwide survey by the Confederation of All India Traders (CAIT). This marks a 25% increase from last year’s turnover of Rs 4.25 lakh crore, showing a strong revival in consumer spending and retail activity during the 2025 festive period.
The ongoing festive season has led to higher spending across sectors, from automobiles and consumer goods to real estate. Combined with the recent reduction in GST rates and personal income tax reliefs, this has boosted consumer confidence and supported the market’s bullish tone.
According to analysts, the festive momentum could sustain the rally, especially as investors expect a rebound in corporate earnings in the second half of the financial year.
“Markets have entered a phase of optimism driven by steady earnings growth and a revival in consumption,” R. Ponmudi, Chief Executive Officer at Enrich Money told Reuters.
“A decisive breakout above 26,000–26,300 could lead to fresh lifetime highs for Nifty, as the broader sentiment remains positive, supported by robust quarterly results, festive liquidity, and consistent foreign inflows,” he added.
Foreign institutional investors (FIIs) have turned net buyers in the Indian market after a long phase of cautious selling earlier this year. Data from the National Securities Depository Limited (NSDL) shows that foreign investors purchased a net $100.4 million worth of Indian equities on October 21.
In addition, FIIs also bought $40.6 million worth of Indian bonds on the same day. This marks the fifth consecutive session of net buying, reflecting improved global confidence in India’s economic outlook.
Analysts believe that strong macroeconomic indicators — including easing inflation, steady GDP growth, and an improved credit rating outlook — are helping attract foreign inflows again.
Adding to the positive cues, a report by Mint said that India and the United States are in the final stages of negotiating a long-delayed trade deal. The agreement could see U.S. tariffs on Indian imports reduced from 50% to around 15%–16%.
Such a deal, if finalised, would help boost India’s export competitiveness and improve overall trade relations between the two countries. It could also provide support to the rupee and strengthen investor confidence.
The rupee is expected to open stronger on Thursday, aided by optimism around the trade talks. The one-month non-deliverable forward market indicated the rupee would open in the 87.80–87.85 range against the U.S. dollar, compared to Monday’s close of 87.93.
Market experts believe that the near-term outlook remains positive, with domestic and global factors aligning in favour of Indian equities. However, they caution that volatility could return if global bond yields rise or if there are delays in the expected U.S. rate cuts.
“While the market trend is bullish, investors should stay alert to global developments, including the U.S. inflation data and interest rate decisions,” said a Mumbai-based analyst. “If corporate earnings continue to surprise positively, there’s a strong chance that both Sensex and Nifty could hit new record highs before the end of the week.”
As trading resumes after Diwali, attention will be on sectors such as banking, IT, auto, and FMCG — all of which are expected to benefit from the festive boost and strong domestic demand.
With foreign inflows improving, trade relations strengthening, and festive buying continuing, market watchers believe the bullish sentiment could push Indian equities into uncharted territory, marking a bright start to the new Samvat year.
(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)