Nifty 50 close to 26K, Sensex jumps 700 points. Why is the Indian stock market rising today?

The Indian stock market witnessed healthy buying interest in intraday trade on Monday, October 20, tracking positive global cues. Market benchmarks, the Sensex and the Nifty 50, rose to their new 52-week highs, rising for the fourth consecutive session.

The Sensex rose over 700 points, or nearly 1 per cent, to a new 52-week high of 84,656.56. The Nifty 50, too, gained by nearly a per cent to rise to the new 52-week high of 25,926.20. The BSE Midcap and Smallcap indices rose by up to half a per cent.

Why is the Indian stock market rising today?

The Indian stock market has been rising for four consecutive sessions. Experts highlight the following five factors behind the rise in the Indian stock market:

1. Positive global cues

Positive global cues influenced market sentiment in India. Among major Asian peers, Japan's Nikkei surged 3 per cent, while Hong Kong's Hang Seng jumped over 2 per cent. Korea's Kospi and China's Shanghai Composite index rose by a per cent.

Japan's stock market surged as media reports suggested that the country was close to installing a new prime minister. Chinese markets grew after its economy grew 1.1 per cent in the third quarter on a quarterly basis, in line with forecasts. Industrial output exceeded expectations with a rise of 6.5 per cent.

2. Reliance leading from the front

Shares of Reliance Industries jumped 3 per cent after reporting in-line Q2 results on Friday. Sharp gains in the shares of the heavyweight company propelled the benchmarks higher. Around 9:30 am, Reliance shares were the top contributors to the gains in the Sensex and the Nifty 50.

Other index heavyweights, including HDFC Bank and Infosys, were also among the top contributors to the gains in the Sensex and the Nifty 50.

3. Stable Q2 earnings

The Q2 results of Indian companies have largely been in line with expectations so far. Major large-cap companies have not seen any sharp deterioration in profits and margins, which is underpinning market sentiment.

"The early Q2 results indicate a sharp recovery in earnings. The results of HDFC Bank and RIL are particularly impressive. The good results of HDFC Bank, particularly the improving asset quality, can sustain the momentum in Bank Nifty, which is already at record highs," said VK Vijayakumar, Chief Investment Strategist, Geojit Investments.

“The short-covering in the last few days is likely to continue, pushing the large-caps higher. The big concern in the market, which has been the poor earnings growth, is getting addressed now. The market is on track to set new highs soon. Sectors with tailwinds of growth are likely to outperform,” said Vijayakumar.

According to brokerage firm Motilal Oswal Financial Services, FY26 will mark the crossover from subdued low-single-digit earnings growth to more sustainable double-digit earnings growth.

"Nifty earnings growth is expected at a healthy 8 per cent and 16 per cent year-on-year (YoY) in FY26 and FY27, respectively, as compared to 1 per cent in FY25," Motilal Oswal said.

4. FIIs buying

Foreign institutional investors (FIIs) have been net buyers in the Indian stock market in the cash segment for the last three consecutive sessions. Their return to the Indian stock market has improved sentiment, while DIIs have already been buying aggressively.

"The momentum in the market, triggered by sustained huge DII buying, marginal FII buying, news of brisk festival season sales of automobiles and white goods, is set to continue with more positive news," said Vijayakumar.

5. Rate cut hopes

The expectations of further rate cuts by the US Federal Reserve and the Reserve Bank of India (RBI) have also influenced market sentiment.

The market is discounting two US Fed rate cuts of 25 bps each in October and December this year, which may weaken the US dollar and increase foreign capital inflows to emerging markets like India.

"Fed cuts weaken the dollar and improve flows in emerging markets. A softer dollar reduces external debt cost and supports commodity and equity inflows," Rahul Ghose, the founder and CEO of Octanom Tech and Hedged.in, noted.

The Reserve Bank of India, too, may cut rates in its next policy meeting due to favourable inflation.

"There is room for one more rate cut by December 2025. With inflation below 3 per cent, the RBI minutes have hinted at an accommodative policy to support growth. Repo rates could move down from 5.50 per cent to 5.25 per cent by the end of the year," said Ghose.

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Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.