SENSEX, NIFTY50 extend 52-week highs on Diwali; here are key reasons why markets are surging

The Indian equity benchmarks extended gains for fourth straight session on Monday, October 20, on occasion of on Diwali as market participants cheered better than expected quarterly numbers posted by index heavyweights like Reliance Industries, HDFC Bank, Punjab National Bank and ICICI Bank. The SENSEX rose as much as 704 points and NIFTY50 index surged to its highest level in over a year to hit an intraday high of 25,926.

In the last four trading sessions the SENSEX has surged as much as 3.2% and NIFTY50 index has gained 3.1%.

Banking stocks power rally

The surge in the equity markets is being powered by buying interest in banking shares, as the measure of banking shares on the NSE, the NIFTY Bank index, rallied nearly 1% to hit an all-time high of 58,242.50 on the back of stronger than expected second quarter earnings posted by banks over the weekend.

HDFC Bank, the country's largest private sector lender, on Saturday reported 18% YoY jump in the net profit for the Q2FY26 quarter.

During Q2FY26, the bank's net interest income steadily grew by 0.4% QoQ and 4.8% YoY at ₹31,500 crore, while the non-interest income slumped sharply by 34% sequentially at ₹114 crore.

On the balance sheet front, the average advances for the quarter jumped 9% YoY at ₹27.9 lakh crore, while the average deposits grew by 15.1% YoY to ₹27.1 lakh crore. The growth in advances was primarily driven by mid-small market lending at 19.4%, followed by retail and corporate sector growth at 7.4% and 6.4% respectively.

Punjab National Bank, the country's leading state-run lender, on Saturday informed exchanges that it wrote back provisions worth ₹639 crore for bad loans against provisioning of ₹199 crore in the same period last year sending the stock up as much as 3.03%.

ICICI Bank and YES Bank also reported better than expected earnings over the weekend boosting the overall market sentiment.

FII turn net buyers

The bullish sentiment also got a boost from buying by foreign institutional investors (FIIs). FIIs bought shares worth ₹309 crore on Friday while domestic institutional investors bought shares worth ₹1,527 crore.

The FIIs have so far this month bought shares worth ₹6,480 crore, and for the calendar year, they have been net sellers to the tune of ₹1,48,040 crore, according to the data from National Securities Depository Limited (NSDL).

Sectoral landscape

Buying was visible across sectors as all the major sector gauges compiled by the National Stock Exchange were trading higher led by the NIFTY PSU Bank index's 2.6% gain. NIFTY Bank, IT, Private Bank, Realty, Healthcare and Oil & Gas indices also rose between 0.6-1%.

Mid- and small-cap shares were trading on a mixed note as NIFTY Midcap 100 index rose 0.72% while NIFTY Smallcap 100 index was trading on a flat note.

NIFTY50 gainers and losers

Reliance Industries was top gainer in the NIFTY50 index, the stock rose over 3% to ₹1,461 after the country's most valuable company on Friday reported a 9.6% year-on-year rise in net profit for the September quarter, driven by strong performance in its consumer-facing retail and telecom businesses and a recovery in its core oil-to-chemicals segment.

Bajaj Finserv, Axis Bank, State Bank of India, Dr Reddy's Labs, Jio Financial Services and Bharti Airtel also rose between 1.4-2.6%.

On the flipside, ICICI Bank, Ultratech Cement, Mahindra & Mahindra, JSW Steel and Eternal were among the notable losers.

The overall market breadth positive as 2,108 shares were advancing while 1,835 were declining on the BSE.