SENSEX, NIFTY50 hit fresh 52-week highs ahead of Diwali; here is why markets are soaring

Banking stocks zoom

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 as much as 406 points to hit an all-time high of 57,828. Seven of 12 shares in the banking index were trading higher, led by IndusInd Bank's 1.72% gain. IDFC First Bank, HDFC Bank, Axis Bank, State Bank of India, and ICICI Bank were also among the gainers in the banking space.

Earnings optimism

Optimism about earnings recovery in the September quarter is also adding to buying interest, analysts noted. Indian IT companies reported a stable set of earnings in the September quarter against an expectation of muted earnings.

Infosys, the country's second-largest IT services company, on Thursday revised its revenue growth guidance on the upside and now expects its revenue growth to be in the range of 2% to 3% from its earlier guidance of 1%-3%, mitigating investor concerns over expectations of strict visa policies in its biggest market, the United States.

Persistent Systems, the country's leading mid-sized IT company, reported strong earnings as it saw an 11% quarter-on-quarter (QoQ) increase in its consolidated net profit.

The firm clocked a profit of ₹471.47 crore in the September quarter of FY26, compared to ₹424.90 crore in the previous quarter, it said in a regulatory filing.

The technology company’s revenue from operations soared 7.4% QoQ to ₹3,580.72 crore during the quarter under review, as against ₹3,333.59 crore in the first quarter of FY26.

At an operational level, Persistent Systems’ EBIT (earnings before interest and tax), also known as operating profit, stood at ₹583 crore in Q2 of FY26, marking a 12.6% QoQ jump from ₹517.8 crore in the June quarter of FY26.

Commenting on the earnings, Sandeep Kalra, Chief Executive Officer and Executive Director, Persistent, said: “We are pleased to report our 22nd sequential quarter of revenue growth, up 4.2% Q-o-Q and 17.6% Y-o-Y, with operating margin improving to 16.3%. Driven by the continued trust of our clients, this performance reflects our commitment to impactful transformation and execution excellence.”

Axis Bank, the country's leading private lender, on Wednesday reported a decline in net profit, but CLSA in a note said that after adjusting for a one-off, its profit before tax was better than estimates, driven by better net interest income and pre-provision operating profit.

CLSA believes that the second quarter was a quarter of change in trend, as loan and deposit growth picked up and slippages came in lower than in the past few quarters.

Bernstein said that Axis Bank’s growth metrics showed sequential improvement, and asset quality witnessed a sharp recovery as slippages declined meaningfully quarter-on-quarter (QoQ).

“While credit costs remain elevated – albeit lower than the previous quarter – this is largely due to one-off provisions on agri advances, which could reverse in subsequent quarters. Encouragingly, underlying trends such as lower slippages and improving card additions suggest that asset quality stress may be nearing a bottom,” Bernstein noted.

"Samvat 2082, ending in April 2026, is likely to be a range-bound year, with the second half being better than the first half. We are in the early phase of Q2 earnings season, and our impression is of a slower growth environment in terms of profits for the quarter. The second half, especially Q4, i.e., January to March 2026, is likely to be the beginning of better performance from corporate India, and Samvat 2083 looks very promising for the markets going ahead. We would advise using this slow period to gradually build positions to benefit from better earnings growth over the next 12 months.” Chandraprakash Padiyar, senior fund manager at Tata Asset Management.

FIIs turn net buyers

The bullish sentiment for equities has also received a boost from buying by foreign institutional investors (FIIs). FIIs bought shares worth ₹997 crore on Thursday, while domestic institutional investors bought shares worth ₹4,076 crore.

The FIIs have so far this month bought shares worth ₹4,327 crore, and for the calendar year, they have been net sellers to the tune of ₹1,50,889 crore, according to the data from National Securities Depository Limited (NSDL).

NIFTY50 gainers and losers

Asian Paints was the top gainer in the NIFTY50 index; the stock rose 4.6% to ₹2,520. Bharti Airtel, Apollo Hospitals, Mahindra & Mahindra, Bharat Electronics, Hindustan Unilever, and Max Healthcare were also among the gainers.

On the flipside, Wipro, Eternal, Infosys, Jio Financial Services, and ONGC were among the losers.