The Indian stock market witnessed healthy gains for the second consecutive session on Thursday, October 16, with benchmarks the Sensex and the Nifty 50 rising by over a per cent each, tracking positive global cues.
The Sensex rose 862 points, or 1.04 per cent, to end at 83,467.66. The NSE counterpart, Nifty 50, settled 1.03 per cent higher at 25,585.30. The BSE Midcap and Smallcap indices rose 0.29 per cent and 0.47 per cent, respectively.
In two days, the Sensex has risen by 1,438 points, or nearly 2 per cent, even as concerns over US tariffs and valuations persist. The Nifty 50 has also gained nearly 2 per cent to reclaim the 25,550 mark.
The overall market capitalisation of BSE-listed firms rose to nearly ₹467 lakh crore from ₹460 lakh crore on October 14, making investors richer by about ₹7 lakh crore in two sessions.
Why did the Indian stock market rise?
Experts highlighted the following five factors that could be behind the gains in the market:
1. Stable Q2 results
The market was expecting Q2 results to be modest, and the numbers so far have been in line, devoid of any negative surprises. This seems to have calmed market nerves, shifting attention to an earnings recovery from Q3 onwards, supported by healthy growth-inflation dynamics and policy reforms.
“Earlier, the market was struggling with several negatives — delayed returns, policy uncertainty, and sentiment dampeners without any real reason. But now, the stable start to the earnings season has provided some relief and confidence,” said Ajit Mishra, SVP of research at Religare Broking.
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.
2. India-US trade deal hopes
Rising hopes of an India-US trade deal are a key factor behind the gains in the domestic market.
As per media reports, both countries are actively engaged in negotiations. Commerce Secretary Rajesh Agrawal will join the Indian delegation in the US on Thursday, October 16, for trade talks, PTI reported.
Experts believe the fresh tariff tussle between the US and China can strengthen the prospects of an India-US trade deal.
“Latest comments from the US administration indicate a reduction in the India-US trade tensions and point to the possibility of a US-India trade deal in the next few weeks. China’s tough actions regarding the rare earth magnets have hit the US hard, and therefore, the US is keen on striking a deal with India, with both countries making some concessions,” said VK Vijayakumar, Chief Investment Strategist at Geojit Investments.
“Even though Indian macros are robust and GDP growth projection for FY26 is being revised up, India’s exports and jobs in labour-intensive areas like textiles, gems and jewellery and leather products have been hit hard. In this context, a US-India trade deal will be a big boost to the markets,” Vijayakumar added.
3. Rupee’s strength
The Indian rupee jumped by over a per cent against the US dollar on Wednesday, influencing domestic market sentiment. The Indian currency remained largely stable on Thursday also as the US dollar weakened amid the prospects of US Fed rate cuts this month and in December. Moreover, the increased prospects of an India-US trade deal also supported the domestic currency.
“The strength in the Indian rupee is a key positive. Yesterday, we saw a healthy recovery, and today it’s holding steady without any major decline. This stability is supporting market sentiment,” said Mishra.
4. FIIs turning buyers
Foreign institutional investors (FIIs) have started nibbling at Indian stocks again. In the previous session, FIIs bought Indian equities worth ₹68.64 crore in the cash segment. Last week, foreign investors invested nearly ₹3,000 crore in Indian stocks in the cash segment, the first positive figure after several weeks.
However, in the derivatives segment, they still hold significant short positions, which, according to experts, could be viewed as positive, as any positive news could trigger a short-covering.
5. Favourable macro underpins market sentiment
India’s favourable growth-inflation dynamics and the prospects of further rate cuts are underpinning market sentiment.
The International Monetary Fund (IMF) has raised India’s growth forecast by 0.2 percentage points to 6.6 per cent for the FY26 fiscal year.
Lower inflation has raised expectations of a rate cut by the RBI in the next policy meeting.
“The low CPI inflation of 1.54 per cent in September and the possibility of FY26 annual inflation declining to 2.6 per cent open up the possibility of further rate cuts by the MPC. This, in turn, will boost the prospects of rate-sensitive, particularly automobiles, which are likely to experience sustained high demand for an extended period of time,” said Vijayakumar.
Anil Rego, the founder and fund manager at Right Horizons PMS, said the backdrop of a 100-basis-point cumulative rate cut, stable inflation, and continued policy support through GST rationalisation and government capex has created fertile ground for a rebound in cyclicals such as banks, autos, cement, and capital goods.
At the same time, valuations have corrected toward their long-term averages, making risk-reward more balanced after months of consolidation.
Rego said the next leg of the rally is likely to be more earnings-driven than liquidity-led, as transmission of lower interest rates and consumption momentum in the festive quarter begin to reflect in corporate results.
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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.
