Sensex jumps 1,000 points, Nifty 50 reclaims 26,200— What drove the Indian stock market higher? Explained

The Indian stock market saw strong gains in intraday trade on Wednesday, November 26, amid positive global cues. The Sensex jumped 1057 points, or 1.25%, to an intraday high of 85,644.19, while the Nifty 50 rose by over 1.28% to a day's high of 26,215.15.

Finally, the Sensex closed with a gain of 1,023 points, or 1.21%, at 85,609.51, while the Nifty 50 shut shop at 26,205.30, rising 321 points, or 1.24%.

The gains were broad-based as the BSE Midcap and Smallcap indices jumped 1.32% and 1.23%, respectively.

Investors' wealth increased by about ₹6 lakh crore as the overall market capitalisation of BSE-listed firms rose to nearly ₹475 lakh crore from ₹469 lakh crore in the previous session.

Why did the Indian stock market rise?

Experts highlight the following five factors behind the rise in the domestic market:

1. Short covering

After the recent decline, the market is witnessing short covering as fundamental factors suggest the possibility of a sustained rally ahead.

"Fundamentals indicate that the market is moving to a new high. It’s only a question of time. Investors’ response should be based on this understanding," said VK Vijayakumar, Chief Investment Strategist, Geojit Investments.

2. Positive global cues

Positive global cues seem to have lifted Indian market sentiment. Global markets are experiencing a stronger risk-on mood amid prospects of an end to the Russia–Ukraine war, a possible US Federal Reserve rate cut in December, and a softer stance by US President Donald Trump on tariffs.

Among Asian peers, Japan's Nikkei and Korea's Kospi surged by 2% each after a nearly 1% gain in the S&P 500 and Nasdaq overnight.

"One of the key drivers behind today’s rally is the strength in global markets. Asian indices traded firmly higher, while Wall Street ended on a positive note overnight. This improved global risk sentiment provided support to Indian equities and encouraged fresh buying at lower levels," said Pravesh Gour, a senior analyst at Swastika Investmart.

3. News flows on the Russia-Ukraine war front

Markets globally are cheering the prospects of an end to the Russia-Ukraine war that started almost four years ago on 24 February 2022.

The end of the war will be a major relief for global economies as it may normalise global supply chains disrupted by the war. Consequently, the prices of crude oil, agricultural commodities, metals, and other critical materials may decline, which could bring global inflation down.

4. The FII factor

Foreign institutional investors (FIIs) bought Indian equities worth ₹785 crore on November 25 in the cash segment. Due to lower crude oil prices and the decline in the US dollar and 10-year Treasury yields, experts expect foreign investors to increase buying in the Indian market.

5. US Fed, RBI rate cut hopes

There are strong expectations that the US Federal Reserve and the Reserve Bank of India (RBI) will cut interest rates in December.

While a Fed rate cut may weaken the US dollar and boost capital inflows into emerging markets like India, an RBI rate cut will infuse liquidity into the system, further accelerating growth, which is already on a strong footing.

"An important positive trigger is renewed optimism around a possible interest rate cut by the US Federal Reserve. Recent softer US economic data has strengthened expectations that the Fed could begin easing monetary policy in the coming months. Lower interest rates in the US generally improve liquidity conditions and increase the attractiveness of emerging markets such as India, prompting risk-on sentiment across equities," Gour said.

Indian stock market outlook

The domestic market looks poised for healthy growth in the coming year due to a confluence of positive factors.

Earnings of Indian corporates came stronger-than-expected in Q2FY26. Experts see healthy earnings in the next financial year due to a lower base, revival in demand, policy reforms, and increased government capital expenditure.

Experts believe the Nifty 50 may reach levels near 30,000 by the end of 2026.

"We have a 12-month target of 29,500 for the Nifty 50. This target implies reaching 29,500 by calendar year 2026," said Pankaj Pandey, the head of research at ICICI Securities.

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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.