Indian stock markets closed the week on a high note on Friday, extending their winning run to a seventh straight session as heavy buying by foreign investors lifted both benchmark indices sharply. The BSE Sensex jumped 1,718 points, or 2.17 per cent, to close at 81,028, while the NSE Nifty rose 494 points, or 2.01 per cent, to settle at 25,030. The Nifty crossed the psychologically important 25,000 mark for the first time in months, a level that market watchers had been waiting for through a long stretch of sideways trading.
The rally was driven almost entirely by foreign institutional investors, who returned to Indian equities in force. Foreign investors bought shares worth about 1.1 billion dollars, or roughly Rs 15,000 crore, on Friday alone, their largest single-day purchase in nearly six years. Over the course of the week, foreign inflows totalled an estimated 4.6 to 5 billion dollars, marking one of the strongest weeks of overseas buying Indian markets have seen in recent years. The surge in inflows came after a prolonged period in which foreign investors had been net sellers, and it signalled a clear shift in sentiment towards Indian assets.
The scale of Friday’s buying was visible across the trading day, with the Sensex holding its gains through the closing bell rather than giving them up in late trade. A separate market-reaction report put the Sensex’s rise at 2.6 per cent for the day, taking it to a six-month high. For investors who have endured months of choppy trading, the breakout above 25,000 felt like a release of long-pent-up momentum.
The rupee also strengthened alongside equities, rising to around 93.91 against the US dollar, a multi-month high. The currency was helped by the same foreign inflows that powered stocks, as dollars pouring into Indian markets increased demand for the rupee. Easing crude oil prices added further support, since lower oil prices reduce India’s import bill and ease pressure on the currency. A stronger rupee is good news for importers and for inflation, and it tends to encourage further foreign investment, creating a virtuous cycle for the markets.
Not every number released on Friday pointed upwards, however. India’s foreign exchange reserves fell by 2.6 billion dollars to 717 billion dollars as of 30 October, according to the latest data. Even so, reserves of 717 billion dollars remain among the largest in the world and give policymakers ample room to smooth out sharp swings in the currency.
With markets closed on Saturday, investors will have the weekend to digest the week’s dramatic moves. The question now is whether foreign buying continues at this pace or whether some profit-taking sets in after such a sharp, fast rally. Seven straight sessions of gains, a record single-day foreign purchase and a break above 25,000 on the Nifty have together given the market a strong platform, but seasoned traders will be watching Monday’s opening closely for signs of whether the momentum can be sustained.
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, since both will decide whether Friday’s surge was the start of a longer rally or simply a strong week in an otherwise uncertain market.
