The Sensex closed 773 points higher on Wednesday after giving up almost and some profit booking was on the cards.
Dalal Street came back from Tuesday’s holiday at full speed, then eased off.
The Sensex jumped as much as 1,413 points to 82,520.40 in early trade before paring gains through the afternoon. It closed up 772.75 points, or 0.95%, at 81,879.40. The Nifty touched 25,424.35 before settling 210.40 points, or 0.84%, higher at 25,255.05, its highest close in more than eight months.
The day’s gains extended a remarkable run. The Nifty has climbed from 23,053 on 30 October to 25,255, a gain of about 9.6% in eight sessions without a meaningful pullback.
Who led
Banks and carmakers did the heavy lifting. The Bank Nifty rose 1.76%, and the PSU Bank index about 3%. Mahindra & Mahindra, InterGlobe Aviation, Eicher Motors, Trent and Tata Steel were the Nifty’s top gainers.
The mix makes sense. Carmakers and airlines benefit directly from cheaper fuel, and Brent crude has fallen from above $110 on 2 November to around $92. InterGlobe, which runs IndiGo, is among the biggest beneficiaries of lower jet fuel costs. Banks gain from a more stable rupee and from hopes that cheaper oil will ease inflation and reduce the need for higher interest rates.
IT and healthcare stocks underperformed, a reversal from Monday, when pharma led the market. IT companies face a stronger rupee, which trims the value of their dollar earnings.
Kalyan Jewellers was among the session’s standout movers, jumping as much as 11.6% to a 52-week high after reporting a 64% rise in quarterly profit.
Foreign institutional investors bought a net ₹12,563 crore of Indian shares in the cash market on Wednesday, according to provisional NSE data. Domestic institutions sold a net ₹8,435 crore. In the first eight sessions of November, foreign investors have bought ₹65,735 crore, while domestic institutions have sold ₹40,504 crore.
Domestic institutions, mainly mutual funds and insurers, had been net buyers in every month since January 2024, holding up the market through a year of record foreign selling. Wednesday was the second-largest day of domestic institutional selling in that period [Single source: Marketcalls]. They are now taking profits into the rally as foreign funds rebuild positions.
Derivatives data points to the same shift. Foreign investors have been closing bets against the market. Their net short positions in index futures fell from about 2.4 lakh contracts on 30 October to about 70,000 on Wednesday. When short sellers close positions, they must buy, which adds fuel to a rally. That short covering helps explain why the market has risen so far, so fast.
The rupee gains
The rupee gained 7 paise to close at 93.70 per dollar, after touching 93.63 during the day, its strongest level in about six months. Foreign inflows and cheaper oil supported it, while a stronger dollar after hot US inflation data capped gains.
That US data, released on Tuesday, is the main cloud over the rally. Consumer prices rose more than expected in October, and markets raised the odds of a half-point Federal Reserve rate increase in December. Indian investors largely shrugged it off on Wednesday, but the afternoon’s selling suggests some caution.
Thursday brings India’s own October retail inflation data, which could breach the RBI’s 6% upper limit, partly because of a low base last year. Results from HAL, NMDC and others are due, followed by Eicher Motors and Tata Motors’ passenger vehicle business on Friday.
For investors, the takeaway is to watch who is buying. This rally is being driven almost entirely by foreign money and short covering, while domestic funds sell. That can carry markets a long way, but it also makes them sensitive to anything that slows foreign buying, such as an aggressive Fed, a rebound in global AI stocks, or a setback in US-Iran talks.
About The Author
