Indian Markets Rebound Strongly as Sensex, Nifty Surge Over 1%, Ending Five-Day Losing Streak

On Monday, October 28, the Indian stock markets showed resilience with the BSE Sensex and NSE Nifty indices surging over 1%, marking a strong start to the final week of October. Following five consecutive days of decline, the market staged a solid recovery driven by favorable global cues, easing geopolitical tensions, and robust support from key sectors, including finance, real estate, and oil & gas. This rally was broad-based, with both large-cap and broader markets—including midcap and smallcap indices—participating, signaling widespread buying interest.

The BSE Sensex opened at 79,653.67, higher than its previous close of 79,402.29, and gained momentum throughout the day, ultimately rising over 1.3%. The NSE Nifty 50 opened at 24,251.10, surpassing its previous close of 24,180.80, to trade above 24,400, advancing over 1%. This bullish start helped both indices break their week-long losing streak, with top gainers on the Nifty 50, including Shriram Finance, Mahindra & Mahindra, ICICI Bank, Adani Enterprises, and IndusInd Bank. Meanwhile, stocks such as Coal India, Bharat Electronics Ltd. (BEL), Tech Mahindra, SBI Life Insurance, and Axis Bank showed minor declines.

Key Factors Behind Monday’s Market Rally

1. Global Cues and Strength in Asian Markets: Asian markets set a positive tone for Indian equities, with Japanese stocks rallying on a weaker yen following recent political changes. The election resulted in Prime Minister Shigeru Ishiba’s coalition losing its parliamentary majority, renewing investor interest in Japanese equities. This strength across Asia provided a supportive backdrop, offsetting the recent bearish trend in Indian markets driven by foreign fund outflows and tepid corporate earnings.
2. Broader Market Rebound from Bargain Buying: With sharp recent declines in midcap and smallcap stocks, investors viewed current levels as buying opportunities. The Nifty Midcap 100 and Nifty Smallcap 100 indices posted gains of 0.81% and 1.31%, respectively, reflecting renewed interest in these segments. After a 9.8% and 9.3% drop from recent peaks in mid and smallcap stocks, value-seeking investors saw potential in the current prices.
3. Eased Middle East Tensions: The easing of geopolitical tensions also played a role. Over the weekend, Israel conducted a limited strike on Iran, avoiding critical oil and nuclear sites, which raised hopes for controlled escalation. Additionally, diplomatic efforts saw Egyptian President Abdel Fattah al-Sisi proposing a two-day truce in Gaza and a limited exchange of hostages between Israel and Hamas. The UN Security Council’s discussions on Israel’s actions added to hopes for stability, giving the Indian markets a positive opening boost.
4. Short Covering Adds Momentum: After a 2.58% decline in the Nifty 50 last week, Monday saw a short-covering rally as traders unwound bearish positions, fueling additional market gains. The improving sentiment prompted investors to buy back positions, adding to the day’s upward momentum and helping to reverse the recent downtrend.
5. Sectoral Strength Leading the Rally: Gains were observed across all sectoral indices, with notable performances in the Nifty PSU Bank, Nifty Metal, Nifty Auto, and Nifty Realty indices. Key banking stocks like ICICI Bank, Bank of Baroda, and Canara Bank led the charge, with positive Q2 results contributing to investor enthusiasm. In addition, the oil & gas sector benefited from a drop in crude oil prices, as Brent crude oil prices fell to $72.77 per barrel and WTI dropped to $68.56.

While Monday’s rally reflects renewed investor confidence, analysts remain cautious, citing possible ongoing volatility due to the earnings season and foreign fund flows. The rally could strengthen further if bargain-hunting persists in mid and smallcap stocks and if institutional investors return in the coming weeks. However, geopolitical risks, particularly in the Middle East, and sector-specific earnings results will continue to influence market sentiment in the days ahead.

Disclaimer: This content is for informational purposes only and does not constitute financial advice. Market conditions can fluctuate, and past performance is not indicative of future results. Please consult with a financial advisor before making any investment decisions.