The Indian equity markets have staged a stunning comeback, reversing this year’s losses as both benchmark indices—Sensex and Nifty—extended their winning streak for the sixth consecutive session on Monday. A mix of foreign investor return, attractive valuations, and optimism over US Fed rate cuts has fueled this surge, analysts say.
Foreign Investors Return, Boosting Market Confidence
After months of selling pressure, foreign institutional investors (FIIs) are making a comeback. Their re-entry into Indian markets, amid a softer dollar and lower US yields, has been a major driving force behind the latest rally.
- The Sensex has soared 4,155.47 points (5.62%) in just six sessions since March 17.
- The NSE Nifty followed suit, climbing 1,261.15 points (5.63%) during the same period.
- March alone has seen the BSE benchmark index jump 4,786.28 points (6.53%).
This reversal comes after a tough February when the Sensex tumbled 4,302.47 points (5.55%). However, March has brought a fresh wave of optimism, with FIIs betting on a favorable domestic macroeconomic outlook.
Value Buying and Attractive Valuations Play a Key Role
Market corrections in previous months had dragged down stock valuations significantly. That, in turn, created a ripe opportunity for bargain hunters to step in.
Satish Chandra Aluri, Analyst at Lemonn Markets Desk, noted that investors found relative valuation comfort after recent declines. “The market rebound has been fueled by value buying at lower levels, improving economic indicators, and a better domestic outlook,” he said.
Sectoral Performance and Government Policies Add to the Momentum
The rally isn’t confined to a few stocks—it’s broad-based. Multiple sectors are showing resilience, especially those that benefit from government spending and anticipated monetary easing.
Vinod Nair, Head of Research at Geojit Investments Limited, highlighted key growth sectors:
- Banking and NBFCs: Expected to benefit from easing interest rates and a growing credit cycle.
- Auto and Consumer Durables: Increased disposable incomes and festive demand could drive gains.
- Real Estate: Lower borrowing costs and government incentives keep the momentum strong.
This sectoral outperformance is creating a ripple effect, lifting overall market sentiment.
Gold Prices Plunge as Investors Book Profits
While equities are on the rise, gold prices took a hit. In Delhi, the yellow metal dropped Rs 700 to Rs 90,550 per 10 grams on Monday. The decline came as traders and stockists offloaded positions after a strong rally.
A potential peace deal between Russia and Ukraine is also playing a role. Talks held in Saudi Arabia over the weekend raised hopes for conflict resolution, prompting investors to shift focus away from safe-haven assets like gold.
Rupee Surges, Wiping Out 2025 Losses
The Indian rupee extended its winning streak, appreciating by 37 paise to close at 85.61 against the US dollar on Monday. This marks the seventh straight session of gains, erasing all losses recorded in 2025.
Traders attribute this strength to multiple factors:
- A surge in foreign capital inflows.
- Strength in domestic equities.
- Weaker global crude oil prices.
- Continued softness in the US dollar.
These factors combined to bolster the rupee, improving investor confidence in the currency.
Investors’ Wealth Surges by Rs 27.10 Lakh Crore
With markets continuing their rally, investor wealth has swelled significantly. The total market capitalization of BSE-listed companies jumped by Rs 27.10 lakh crore as the Sensex continued its upward march.
On Monday alone, the Sensex surged 1,078.87 points (1.40%), closing at a six-week high of 77,984.38. During the day, it touched an intraday peak of 78,107.23, marking a strong resurgence from last month’s lows.
