D Street lights up, ends Diwali week with a firecracker of a Friday

Indian stocks on Friday surged in the face of a precipitous slide in Asian equities to log their biggest weekly gains in nearly six years, highlighting diversity in investment the country offers foreign funds amid a continental meltdown in concentrated artificial intelligence (AI) bets.

Japan, South Korea, mainland China, Taiwan and Singapore lost between 2% and 7% as AI bets were dramatically reversed after the US midterms and an overnight Nasdaq plunge, while the Nifty and Sensex – with gains of more than 2% each – stood in sharp relief across a red ocean.

The latest rally, which has boosted both gauges 10% from recent lows, also marked the second consecutive week of gains, indicating a sharp improvement in investor sentiment. Banking and financial services shares, firm favourites traditionally with foreign institutional investors (FII), emerged as top gainers. Large-cap stocks are at the vanguard of the rally, pointing to increased FII appetite for Indian risk assets.

The BSE Sensex climbed 1,718.01 points, or 2.17%, to 81,028.02, and the Nifty surged 493.75 points, 2.01%, to 25,030.35 Friday. On a weekly basis, the Sensex gained 8.8%, while Nifty climbed 8.5%.

This was the strongest weekly performance of the Sensex since February 2021, when the index had surged 9.61%.

Muhurat Trading 2026 will be held on Sunday, marking the beginning of Samvat 2083.

Indian equities staged a firm recovery this week with the rebound supported by easing crude prices, positive sentiment around a possible LTCG tax rejig, and global developments, said Sandip Bansal – Deputy CIO, ASK Investment Managers.”India remains one of the attractive long-term investment opportunities globally. While markets may experience periods of volatility driven by global geo-politics, we believe the underlying drivers of India’s growth remain strong and durable,” Bansal said.

Crude oil prices are on course to record their steepest weekly fall since April 2020.

D-St Just 5% Away from Highs with a 10% Bounce from Lows

Mumbai: The recent rally in Indian equities has pushed the benchmark Sensex and Nifty into technical rally territory, with both indices gaining more than 10% from their recent lows. The recovery has been supported by strong corporate earnings, reasonable valuations, falling crude oil prices and renewed foreign investor interest.

A technical rally is generally defined as a short-term rise of 10% or more from a recent low. The Sensex has crossed the 81,000 mark, while the Nifty has moved above 25,000. Both indices are now 5% away from their record highs.

Ben Powell, chief investment strategist for the Middle East and APAC at BlackRock Investment Institute, said the recent gains were encouraging after a period in which Indian equities had been weighed down largely by global factors. “The durability of the rally will increasingly depend on earnings delivery. Valuations have become more attractive, but we remain selective and focused on fundamentals. We remain strategically overweight Indian equities for the long term, while maintaining a more neutral tactical view,” Powell said. Since October 26, the Sensex has gained 7,905 points, or 10.8%, while the Nifty has risen 2,430 points, also up 10.8%. Both indices advanced in eight of the 10 trading sessions during this period.

Oil Sinks, Funds Flow

Crude oil prices have declined more than 20% over the past three sessions, easing concerns over inflation, India’s import bill and pressure on the rupee. A correction in AI-related stocks across global markets, including the US, Japan, South Korea and Taiwan, has also supported sentiment.

Foreign portfolio investors (FPIs) have made net purchases of more than $4 billion over the past 13 sessions.

Separately, corporate earnings have strengthened the investment case for India, which remained a relative laggard in Asia, where AI-led trades drove valuations in countries housing chip factories and related hardware.

Companies that have reported results so far have delivered average earnings growth of 25% year-on-year, said Deepak Malik, CIO and fund manager at Carnelian Mutual Fund.

“I believe markets follow earnings growth. Corporate earnings growth has been extremely strong over the past two to three quarters. As long as this growth continues, markets should also remain on an upward trajectory,” Malik said.

However, Shankar Sharma, founder of GQuant Investech, cautioned against interpreting the gains as the start of a sustained recovery without any further confirmation.

“What has been surprising in the Indian bear market of two-and-a-half years is the absence of violent rallies. Most bear markets have such events quite regularly. You can go back to 2008 and see plenty of such fast and furious upward moves. The broader market has not done much; only the underperforming sectors have done well. We need more confirmation on whether this is a technical rally or the start of something more interesting,” Sharma said.