NIFTY50 and SENSEX rally for sixth consecutive session; here’s why

NIFTY50 and SENSEX opened higher on Monday morning and extended their gains in the late morning session. The benchmark indices have now rallied for six consecutive sessions extending their gains above 7% from the recent lows. In addition, the NIFTY midcap 100 and small-cap 100 indices outperformed the benchmark by gaining 1.3% on Monday.

Sectorally, NIFTY Private Banks, Realty, PSU Bank and Financial Services were top gainers with gains of up to 2.2% and NIFTY Auto remained the only laggard with minimal losses. The broader market breadth remained in favour of advances as 2,100 stocks traded in green as compared to 615 stocks in red. Similarly,45 stocks hit a 52-week high and 158 stocks hit the upper circuit.

Here are the top three reasons for today’s market rally

Strong FII buying

The foreign institutional investors that sold Indian equities relentlessly for the past few months have shown a change in their stance by pausing the selling and slowly started buying. FIIs bought nearly ₹7,400 crore worth of stocks on Friday for the third time in the previous week. Moreover, FIIs also reduced their derivative position significantly from the first week of March. The FIIs now hold 96 thousand contracts in the short side as compared to 1.8 lakh contracts in the first week of March. The significant change in the FII's position has changed the sentiments of the markets from bearish to slightly bullish as per experts.

Positive global market cues

The global market cues remained positive despite tariff war concerns. The US markets closed positive on Friday and Asian markets opened with gains on Monday morning. The gains on Wall Street were largely derived from positive statements from President Trump as he signalled flexibility in reciprocal tariffs which are expected to come into effect from April 2. In addition, the Federal Reserve’s outlook on two more rate cuts in 2025, boosted investor sentiments across the globe. Domestically, experts predict three rate cuts in 2025 for the Indian economy, which is expected to boost credit demand and support the growing economy.

Optimism around Q4 and FY25 results

The Q3FY25 results season came in better than expected, giving some relief to investors after a dismal performance in Q2FY25. As we approach the end of Q4FY25 and FY25, investors and market experts sound optimistic about the result season. The strong pullback in the GDP growth from the lower levels indicates the bottoming out of weak earnings growth for the economy. The resumption in capex spending by the government and rate cut by the Reserve Bank of India is expected to impact earnings growth positively for the quarter.

Apart from the above key factors, other macro-indicators also aided the better performance of Indian markets amongst its global peers. Indian markets also traded at attractive valuations after a recent fall as earnings growth picked up from Q3FY25 boosting investor sentiments. Secondly, the stabilisation of Indian Rupee against the US dollar is also one of the contributing factor the overall market rally.