SENSEX, NIFTY50 snap 7-day fall: From FII buying to global cues, top factors behind market rally

The Indian stock market snapped its seven-day losing streak on Thursday, August 20, tracking its Asian peers. The market breadth was seen in favour of advances, with 2,281 stocks rising out of 3,491 traded.

Here are the factors behind market rise on Thursday

Positive global cues

Other stocks in Asia ended with gains on Thursday amid easing pressure from the bond market lifting sentiment.

Japan's Nikkei rose 1.2%, China's Shanghai Composite advanced 0.24%, South Korea's KOSPI jumped 5.57% and Hong Kong's Hang Seng climbed 0.92%.

US stocks ended higher on Wednesday after the US Treasury Department announced a move that could ease pressure coming from the bond market. The Dow Jones Industrial Average rose 0.22%, the S&P 500 index advanced 0.21% and the tech-heavy Nasdaq rose 0.16%.

US bond treasury

Treasury yields fell in the morning after the US Treasury Department said it will at least double the size of its planned purchases of longer-term Treasuries from September 9 through November 4, news agency AP reported.    

FIIs

According to exchange data, on Wednesday, the foreign institutional investors (FIIs) bought shares worth ₹407.99 crore, on a net basis.

Foreign investors continued with their buying spree in Indian equities, investing ₹16,621 crore in the first fortnight of August. The inflow follows a ₹20,200-crore investment in July, marking a sharp turnaround after four consecutive months of heavy selling by the FIIs.

IT and realty stocks rising

IT stocks continued their rally for the second consecutive session on Thursday, with several IT shares trading higher after recent declines. The NIFTY IT index rose 2% to its intraday high of 30,942.90.

Experts suggest that, looking ahead, mid-tier IT companies are potentially in a better position to take advantage of the tectonic changes in the sector, with the help of strong management and execution.

Further, realty stocks were also one of the major contributors to the market rally. The NIFTY Realty index also soared 2% to its day’s high level of 909.80.

Value buying

After the recent streak of losses, value buying by the market investors also supported the recovery, with participants buying shares at lower levels.

The broader market also saw a similar trend, with both the midcap and smallcap indices surging 1% on Thursday.

Q1 earnings

After the recently concluded earnings announcement for the quarter ended June 30, 2026 (Q1 FY27), the market investors showed interest.

According to various media reports, the Q1 earnings delivered a strong number, supported by broad-based improvement across consumption, exporters, BFSI and commodities.  However, many reports said that the mid- and small-cap firms delivered better earnings than the large-cap firms.

VIX down 18%

The volatility index tumbled nearly 18% on Thursday, touching an intraday low of 9.33 levels. At the time of writing the piece, the India VIX index was trading at the 10.68 level, losing 5.65%.

The fall in VIX, or fear gauge, indicates that the investors believe that the worst of the declines may be over.

The volatility index is a measure of the market’s expectation of volatility over the near term. Volatility is often described as the “rate and magnitude of changes in prices" and in finance often referred to as risk.