SENSEX surges over 600 points, NIFTY50 reclaims 25,000; here are key factors driving the rally

The Indian equity benchmarks were trading firmly higher on Monday, May 26, after staging a gap up opening. The SENSEX rose as much as 636 points and NIFTY50 index reclaimed its important psychological level of 25,000 powered by gains in index heavyweights like ICICI Bank, HDFC Bank, Mahindra & Mahindra, Reliance Industries, Larsen & Toubro and Infosys. As of 9:26 am, the SENSEX was up 586 points or 0.72% at 82,307 and NIFTY50 index advanced 185 points or 0.73% to 25,034.

Investors' sentiment got a boost after the Reserve Bank of India on Friday announced a record ₹2.69 lakh crore dividend to the government for FY25, 27.4 per cent higher than 2023-24, helping the exchequer to tide over challenges posed by US tariffs and increased spending on defence due to the conflict with Pakistan.

The decision on the dividend payout was taken at the 616th meeting of the Central Board of Directors of Reserve Bank of India held here under the Chairmanship of Governor Sanjay Malhotra.

RBI's bumper dividend will ease the fiscal position of the government and help bolster growth in the world's fourth-largest economy, economist at SBI said in a report.

Indian markets were outperforming their global peers as most of the markets in Asia were trading mixed. Japan's Nikkei rose 0.75%, South Korea's KOSPI advanced 1.15% while Hong Kong's Hang Seng fell 0.93% and China's Shanghai Composite declined 0.3%.

Back home, buying was visible across board as all the major sector gauges compiled by the National Stock Exchange were trading higher led by the NIFTY Metal index's 1.35% gain. NIFTY Auto, Realty, Consumer Durables, Oil & Gas, PSU Bank, Bank and Financial Services indices also rose between 0.6%-1.25%.

Buying in index heavyweights like ICICI Bank, HDFC Bank, Mahindra & Mahindra, Reliance Industries, Larsen & Toubro and Infosys alone added over 400 points towards gain in the SENSEX, data from BSE showed.

Broader markets were also witnessing buying interest as NIFTY Midcap 100 index advanced nearly 1% and NIFTY Smallcap 100 index rose 0.67%.

NIFTY50 gainers and losers

As many as 44 shares in the NIFTY50 basket were trading higher led by Hindalco's 2.65% gain. Mahindra & Mahindra, Tata Motors, Hero MotoCorp, Larsen & Toubro, Bajaj Auto, ICICI Bank and Tata Steel also rose 1.3%-2.5%.

On the flipside, Eternal, Shriram Finance, Bharat Electronics, Trent and SBI Life were among the notable losers.

The overall market breadth was positive as 2,168 shares were advancing while 10,65 were declining on the BSE.