Indian markets staged a sharp turnaround in the pre-Diwali week, with the BSE Sensex rising about 8.8 per cent to close at 81,028, its highest level since February 27, and the NSE Nifty crossing the 25,000 mark. The rally marked a decisive break from months of sideways trading and heavy foreign selling, and it came just as the festival season put Indian equities back in the spotlight.
The driving force behind the surge was a return of foreign portfolio investors, who turned net buyers of around $4.1 billion in Indian equities in November. That is a striking reversal after they were net sellers of $23.2 billion between January and October 2026, and of $18.9 billion across all of 2025. On Friday alone, foreign investors bought shares worth about $1.1 billion, their largest single-day purchase in nearly six years.
The rupee strengthened alongside equities, moving below 94 to the US dollar for the first time since April 22. The 10-year government bond yield fell to 7.2 per cent from near 7.5 per cent, reflecting improved sentiment towards Indian assets. Market watchers say the combination of a rising market, a stronger currency and falling bond yields is the clearest sign yet that global investors are warming to India again.
Three factors drove the turnaround. Brent crude eased to below $100 a barrel from $118 the previous week, after emphatic Democratic wins in the US midterms reduced fears of an American military escalation against Iran. Lower oil prices directly ease India’s import bill and inflation, since the country imports most of its crude. At the same time, the broader improvement in global risk appetite encouraged money to flow back into emerging markets, with India among the main beneficiaries.
Domestically, the steady flow of economic data has helped. Manufacturing activity remains resilient, corporate earnings have held up, and the festive season has lifted consumption. The government’s infrastructure push and a stable policy backdrop have added to the case for India as a long-term investment destination, even as global growth worries persist.
Analysts, however, sound a note of caution. The reprieve may prove temporary, they warn, with risks remaining from El Nino and any renewed geopolitical flare-up. The same global factors that drove money into India this week could reverse quickly if crude spikes again or if the US policy outlook changes. Policymakers, the argument goes, should use the breather to double down on macroeconomic stability and policy continuity, which investors ultimately reward.
For ordinary savers, the rally is a reminder of how quickly sentiment can turn in equity markets. Those who stayed invested through the flat months are now seeing the benefit, while those waiting on the sidelines may be tempted to jump in at higher levels. As always, the levels that matter now are whether the Nifty can hold above 25,000 and whether foreign investors keep buying in the coming week.
The market will get its next signal on Sunday afternoon, when the exchanges hold their customary one-hour Muhurat trading session for Diwali, and then on Monday, when regular trading resumes. Seasoned traders will be watching the opening closely for signs of whether the momentum can be sustained, or whether some profit-taking sets in after such a sharp, fast rally.
