Sensex Jumps 638 Points as Nifty Crosses 26,000 Mark

Introduction

Indian equity markets extended their gains for a second consecutive session on Monday, driven by strong global cues and sustained investor optimism. The BSE Sensex surged by 638.12 points, or 0.75%, to close at 85,567.48. Similarly, the NSE Nifty 50 climbed 206 points, or 0.79%, to settle at 26,172.40. This rally builds upon the strong recovery witnessed on the previous trading day, signaling a robust year-end momentum supported by healthy liquidity and positive sentiment.

Snapping the Losing Streak

The positive momentum began on Friday, when the market snapped a four-session losing streak. The rebound was triggered by favorable global data that renewed risk appetite among investors. On that day, the BSE Sensex closed with a gain of 447.55 points, or 0.53%, at 84,929.36, while the NSE Nifty rose by 150.85 points to end at 25,966.40, decisively reclaiming the 25,900 mark. The recovery was broad-based, with buying seen across multiple sectors, including auto, pharma, and realty.

Global Cues Fuel the Rally

A primary driver for the market's turnaround was positive news from international markets. Softer-than-expected US inflation data was a key catalyst, boosting global risk appetite. US consumer prices rose 2.7% year-on-year in November, below market expectations of 3.1%. This development reignited hopes that the US Federal Reserve might consider easing interest rates in the near future. Following this, Wall Street indices closed higher, setting a positive tone for Asian markets. Major indices across Asia, including South Korea’s KOSPI, Japan’s Nikkei, China’s Shanghai Composite, and Hong Kong’s Hang Seng, all closed with gains, providing strong tailwinds for Indian equities.

Revived Hopes for Federal Reserve Rate Cuts

The moderation in US inflation is particularly significant for emerging markets like India. Expectations of lower interest rates in the US typically lead to increased foreign capital inflows as investors seek higher returns. This improved liquidity outlook has been a crucial factor in boosting investor confidence on Dalal Street. While some analysts have urged caution, citing potential data distortions, the broader market sentiment has remained optimistic about a more accommodative monetary policy from the US central bank.

Institutional Buying and Rupee Strength

The rally was further supported by strong institutional participation. Foreign institutional investors (FIIs), who had been sellers in previous sessions, turned into net buyers, purchasing equities worth nearly ₹600 crore on Friday. Domestic institutional investors (DIIs) continued their strong support with inflows of around ₹2,700 crore. This combined buying activity provided significant liquidity to the market. Additionally, the Indian rupee appreciated for the third consecutive session, supported by corporate dollar inflows and broad weakness in the US dollar, further improving market sentiment.

Sectoral Leaders and Stock Movers

The gains were visible across various sectors, indicating a healthy market breadth. On Monday, top gainers in the Sensex pack included Trent, Infosys, Bharti Airtel, Tech Mahindra, and Maruti Suzuki India. The IT sector, in particular, showed significant strength, with the Nifty IT index surging nearly 3%. This was partly driven by investors positioning themselves ahead of Infosys's ₹18,000 crore share buyback. Other stocks in the spotlight included Shriram Finance, which surged over 4% after approving a major investment from Japan’s MUFG Bank, and Reliance Industries, which rose 1.4% after an acquisition by its subsidiary.

Market Performance Summary

Technical Analysis and Outlook

Technical analysts view the recent market action as encouraging. According to Rupak De, Senior Technical Analyst at LKP Securities, the Nifty has broken out of a falling wedge pattern and reclaimed its 21-day Exponential Moving Average (EMA) after finding support near the 50-day EMA. He noted that a decisive move above the 26,000 level could propel the index towards 26,300. For the near term, 25,900 is expected to act as a crucial support level. Vikram Kasat, Head of Advisory at PL Capital, also pointed to technical indicators suggesting a phase of consolidation, with support for the Nifty seen around 25,750.

Broad-Based Market Participation

The rally was not confined to large-cap stocks. The broader market also showed strong performance, with the BSE Midcap and Smallcap indices rising around 1% each during Friday's session. This outperformance reflects improved risk appetite and selective buying in mid and small-sized companies, lending further strength to the market's overall structure. The positive sentiment was mirrored on Monday, with broad-based buying continuing across sectors.

Conclusion

The Indian stock market's strong performance over the last two sessions marks a significant recovery, driven by a confluence of positive global and domestic factors. Cooling US inflation, renewed hopes of Fed rate cuts, strong institutional inflows, and a strengthening rupee have collectively improved liquidity expectations and boosted investor confidence. While the outlook remains constructive, market participants will continue to monitor global central bank actions and geopolitical developments. The market's resilience suggests that the underlying growth story for Indian equities remains intact.