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Falling crude oil prices, renewed foreign investor buying and hopes of easing geopolitical tensions after the US midterm elections lifted investor sentiment, sending the Sensex up 2.6% and the Nifty 2.4%.
Indian equity markets staged a massive rally on Thursday, with the Sensex surging over 2,000 points and the Nifty climbing more than 600 points as investors cheered a combination of falling crude oil prices, fresh foreign fund inflows and improving global sentiment following the US midterm elections.
The BSE Sensex jumped 2,008.61 points, or 2.6 per cent, to close at 79,310.01. The NSE Nifty 50 advanced 576 points, or 2.4 per cent, to settle at 24,536.60.
The rally came after Wall Street ended sharply higher overnight, with investors.
assessing the implications of the Democrats’ sweeping midterm victories and the possibility of reduced political and geopolitical uncertainty.
But what exactly drove Dalal Street’s surge? Here are four key factors behind Thursday’s market rally.
Crude oil slips below $95
The biggest relief for Indian markets came from the sharp correction in global crude oil prices. Brent crude was trading at $93.59 per barrel, down 1.09 per cent, while US West Texas Intermediate (WTI) crude fell 1.53 per cent to $86.77, according to the market snapshot cited earlier in the session.
Oil prices have retreated from levels above $100 per barrel amid hopes that the US-Iran conflict could move towards a diplomatic resolution.
More from BusinessFor India, which imports most of its crude oil requirements, cheaper energy can reduce the import bill, ease pressure on the current account deficit and help contain inflation. It can also lower input costs for companies across several sectors.
Foreign investors return with big-ticket buying
The second major trigger was renewed buying by foreign institutional investors (FIIs), whose sustained selling had weighed on Indian equities. Exchange data showed foreign investors were net buyers for a fourth consecutive session on November 4, purchasing shares worth Rs 7,284.03 crore. This followed net buying of Rs 6,836.81 crore on November 3.
Democrats’ US election victory
The third trigger came from Washington. Democrats’ sweeping victories in the US midterm elections have changed the balance of power in Congress, potentially making it harder for President Donald Trump to push through his policy agenda without resistance.
Investors are hoping that greater congressional scrutiny could limit aggressive trade and tariff policies, reducing uncertainty for global businesses and emerging markets such as India. The election outcome has also fuelled expectations that Trump could face greater pressure to seek a diplomatic resolution to the Iran conflict.
However, the implications are not immediate. Trump retains significant executive powers over trade and foreign policy, and the election result does not guarantee a rollback of tariffs or an end to the Iran war.
Global market rally lifts investor confidence
Indian equities also benefited from a strong rally across global markets.
On Wednesday, all three major US indices ended higher. The Dow Jones Industrial Average surged 3.03 per cent, the S&P 500 gained 1.58 per cent and the Nasdaq Composite advanced 1.44 per cent.
The MSCI All-World index rose 1.38 per cent, while Europe’s STOXX 600 climbed 1.82 per cent to a two-month high. The global rally reflected relief among investors after the US election results provided greater political clarity. The dollar also weakened, while benchmark US Treasury yields declined.
A softer dollar and lower US bond yields can make emerging-market assets relatively more attractive to international investors, potentially supporting flows into Indian equities.
