Diwali Cheer On D-Street: Nifty Hits Fresh 52-Week High; Key Factors Driving The Rally? | Markets News

Nifty At Record High

Nifty 50 Hits Fresh 52-Week High: The Nifty 50 surged to a fresh 52-week high above the 25,700 mark on Friday, lifted by foreign inflows, easing US bond yields, a stronger rupee, and festive optimism. The benchmark index has climbed 2.2% over the past three sessions, extending its Diwali-week rally as both global and domestic cues turned favourable for equities.

Despite the uptrend, the index remains about 570 points, or 2%, below its all-time high of 26,277, hit on September 27, 2024. Here are the eight key factors driving today’s rally:

FIIs return to Indian markets

After months of persistent selling, foreign institutional investors (FIIs) have turned net buyers. Between October 7 and 14, they purchased over ₹3,000 crore worth of equities in the secondary market, NSDL data showed. Their primary market investments topped ₹7,600 crore, while NSE provisional data indicated inflows of another ₹68 crore on October 15.

FIIs bought equities worth ₹997 crore on October 16, while domestic institutional investors (DIIs) added ₹4,076 crore.

This marks a sharp reversal — October’s FII outflows stand at just ₹903 crore so far, compared with ₹22,761 crore in September and ₹41,908 crore in August.

US bond yields ease

A steep fall in U.S. Treasury yields has triggered a global risk-on sentiment. The two-year yield dropped to a three-year low, while the 10-year fell to a six-month trough of 3.95%. Lower yields typically make emerging markets like India more attractive, drawing in fresh foreign capital.

Optimism over India–US trade ties

Investor confidence also got a boost from renewed optimism on India–U.S. trade cooperation. U.S. President Donald Trump said Prime Minister Narendra Modi had pledged to halt Russian oil purchases, while Indian officials confirmed that talks to strengthen bilateral energy ties are “ongoing.” The development is seen as reducing potential trade friction.

IPO pressure eases

After a busy fortnight dominated by large IPOs such as Tata Capital and LG Electronics India, the primary market pipeline has lightened. The absence of major new issues this week has eased liquidity pressure, freeing up capital for secondary market buying.

Short covering amplifies gains

A wave of short covering in frontline stocks is fueling the rally. “Significant short positions remain in the system, and the market’s strength could keep bears on the back foot, prompting further short covering,” said Dr. V.K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services. He added that the market remains “resilient and technically strong,” with bearish unwinding likely to sustain momentum into the festive week.

Rupee firms up

The rupee strengthened to 87.75 against the dollar, aided by RBI’s dollar sales through state-run banks. It has now gained over 1% in two sessions. Traders said the RBI’s interventions have squeezed speculative long-dollar bets, while a weakening dollar index — headed for its biggest weekly drop in three months — has further supported the local currency.

Bank stocks extend rally

Financials continued to lead the uptrend ahead of results from ICICI Bank and HDFC Bank. The Nifty Bank index rose 0.6%, with ICICI Bank up 0.6% and HDFC Bank up 0.4%.

“Strong results from HDFC Bank and ICICI Bank could support the market, and if Reliance joins the rally after its results, momentum may extend further,” said Vijayakumar.

Oil prices decline

Crude prices extended their fall, with Brent trading near $61 a barrel and WTI around $57.4. The drop followed reports that U.S. and Russian leaders plan to meet in Hungary to discuss ending the Ukraine war, easing supply concerns. Lower oil prices benefit India by narrowing the trade deficit, easing inflation, and improving corporate margins.