Why is market rising today? Sensex jumps 800 pts, Nifty rises above 23,650. 6 key factors behind today’s rally

Sensex jumped 800 points while Nifty 50 rose above 23,650 on Tuesday morning. The sharp gains added nearly Rs 4 lakh crore to the total market capitalisation of all companies listed on BSE, pulling it up to Rs 486 lakh crore.

IndiGo and HDFC Bank shares gained around 3% each to lead gains on Sensex, while UltraTech Cement, HUL, Asian Paints, Bajaj Finance, Bajaj Finserv and Infosys shares gained around 2% each. Bucking the trend, Reliance Industries shares fell a little over 1%, following a historic 12% surge in the previous session.

Among the sectors, Nifty Auto, Nifty Financial Services, Nifty FMCG, Nifty IT, Nifty Private Bank and many other indices jumped more than 1% each. Nifty Pharma, however, slipped into the red.

Broader markets extended gains, with Nifty Smallcap 250 and Nifty Midcap 100 indices gaining up to 0.6%. The overall market breadth continued to favour the bulls, with NSE seeing 2,406 advances and 673 declines, while 89 stocks remained unchanged.

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Here are the key factors boosting the market today:

1) LTCG tax rejig hopes riseThe central government would “consider” the request from foreign investors to review the structure of taxes levied on equity capital gains, Finance Minister Nirmala Sitharaman said on Monday. The circumstances have changed and, therefore, the voices of concern are louder,” she said at a media event, in reference to reports that her administration has received suggestions to review levies on long-term capital gains (LTCG) for overseas investors. “I quite appreciate that. So, I’ll consider all this… Our growth is very important; where people are putting their very best, we are able to see sustained 7(%)-plus growth.”

Also read | We will consider the call for review of LTCG tax: Finance minister Nirmala Sitharaman

This comes after she said in October that discussions around long-term capital gains tax (LTCG) and securities transaction tax (STT) were ongoing, giving investors a fresh talking point at a time when markets are looking for relief after weeks of pressure.

Jefferies, in a recent report, said that a potential cut to LTCG tax could offer foreign investors a reason to return to a market they have steadily abandoned, with banks, energy companies and other largecaps positioned to benefit the most.

2) Easing oil prices

Oil prices inched up slightly on Tuesday morning but remained well below the levels of around $110 per barrel seen in the recent weeks. Brent crude futures traded below $105 per barrel while WTI Crude futures traded below $97 per barrel.

Iran on Monday said that talks with the US to end the conflict were ongoing. This came after several days of talks between Iran and Qatari mediators concluded with revised proposals but failed to produce a breakthrough. Iranian President Masoud Pezeshkian said Supreme Leader Ayatollah Mojtaba Khamenei has granted the government certain powers to pursue peace negotiations.

Caution however, is still warranted as reports said the US has carried out a strike on Iran’s Qeshm Island, fuelling concerns over a possible escalation of the eight-month conflict.

3) AI trade fizzles out

Apple announces its July-September quarter results on Monday, beating expectations as the iPhone-maker notched a “revenue record”, driven by iPhone sales and services revenue. However, increased costs related to artificial intelligence raised worries over further margin drag. The company’s CFO Kevan Parekh warned that Apple’s gross margin will slow a bit in the final stretch of the year, compared to its September quarter margin of 47.9%.

“We expect gross margin to be between 45% and 46%. This includes primarily the impact of higher memory costs, as well as some costs related to the ramp of Siri AI,” Parekh said. As a result, the shares of the company dropped in the after-hours trading as worries around overspending on AI were re-triggered.

India is being seen as the so-called ‘Anti-AI’ trade. Hence, worries around AI frenzy going bust often lead to optimism in Dalal Street.

4) FII buying continues

Foreign investors remained net buyers of Indian equities on Monday, net purchasing shares worth nearly Rs 3,115 crore, according to provisional data on NSE. FIIs have recently been purchasing Indian shares, after a massive selloff that rattled Dalal Street.

After remaining net sellers of Indian equities in September and the first half of October, the trend changed in the second half of last month, and the buying continued in November, providing some much-needed relief to the bulls of Dalal Street.

5) Rupee rises

Rupee gained 0.26% to open at 94.6550 against the US dollar, as against the previous close of 94.90 against the American greenback. “With the US election date approaching, markets will closely monitor whether the administration maintains this diplomatic stance or geopolitical tensions resurface. Lower crude prices could provide near-term support to the domestic currency. The rupee is expected to trade in a range of 94.50–95.25,” said Jateen Trivedi, VP Research Analyst of Commodity and Currency, LKP Securities.

6) Value buying

Dalal Street’s rise also comes as analysts point out attractive valuations in large caps following a massive correction in 2026 so far. Mahesh Nandurkar, equity analyst at Jefferies, recently said the risk-reward equation is becoming more favourable for large caps because of their better relative valuations against midcaps, while the earnings growth gap is expected to narrow over FY26-28.

“We believe risk-reward is becoming more favorable for largecaps on better relative valuations vs. Midcaps, while the earnings growth gap is narrowing over FY26-28E,” Nandurkar said in a recent report.

Also read | Rs 1 lakh crore is chasing small & midcaps, but largecaps have the valuation. Where are India’s next multibaggers hiding?

What lies ahead for Dalal Street?

The circumstances are ideal for the continuation of the ongoing market rally, said V K Vijayakumar, Chief Investment Strategist at Geojit Investments. He noted that the decline in Brent crude to $104, further weakening of the AI trade, continuing flow of good Q2 results and FIIs turning buyers have the potential to accelerate the ongoing rally.

“The 11.6% surge in a mega-cap stock in one day is very rare. But this happened in RIL yesterday. Huge delivery based buying of around Rs 6,413 crores, supported by excellent Q2 results, triggered massive short covering in the stock. Massive value buying along with big short covering leads to such sharp surges in stocks, even in megacaps. The takeaway from this experience is that patient value buying will be rewarded. It is possible that there are short positions in many quality large-caps. These are short-positions created by bears on expectations of continued FII selling. The circumstances are changing,” he added.

Technical view on Nifty

Nifty zoomed past the 23,175-225 region yesterday, clearing the path for 23,500-800, pencilled in yesterday, while the 200 dma at 24,011, points to room for more gains, said Anand James, Chief Market Strategist at Geojit Investments.

That said, Nifty’s inability to float above 23,460 could signal weakness, but James prefers to wait for a close past 23,300 to switch sides.

Disclaimer: This article has been written by Debaroti Adhikary, who is not a SEBI-registered Research Analyst or an Investment Adviser. Debaroti Adhikary and his/her ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclaimers here.