Stock market today: The Indian stock market has been witnessing healthy gains since last Wednesday, with the benchmarks Sensex rising by over 1,500 points and the Nifty 50 reclaiming the psychologically significant 25,000 mark in three sessions.
On Monday, October 6, extending gains to the third consecutive session, the Sensex rose over 600 points, or nearly 1 per cent, to an intraday high of 81,846, while the Nifty 50 also rose by almost a per cent to an intraday high of 25,095.95.
Finally, the Sensex closed 583 points, or 0.72 per cent, higher at 81,790.12, while the Nifty 50 ended at 25,077.65, up 183 points, or 0.74 per cent.
The BSE Midcap index jumped 0.68 per cent, but the Smallcap index ended with a loss of 0.20 per cent.
“The domestic equity market ended the session on a positive note, led by gains in the financial services and IT sectors, ahead of the Q2 results. The banking index outperformed, bolstered by strong quarterly updates announced by large scheduled banks and attractive valuations, while hospital stocks surged following the revision of CGHS rates,” said Vinod Nair, Head of Research, Geojit Investments.
Why is the Indian stock market rising?
Experts highlight the following five factors behind the rise in the domestic market benchmarks:
1. Short covering at play
Experts highlighted that the domestic market is witnessing short covering in quality stocks after the recent correction, which is driving the benchmarks higher.
IT stocks, which suffered significant losses in the recent past due to concerns over the H-1B visa fee hike and other sectoral headwinds, saw healthy gains on Monday. The Nifty IT index jumped over 2 per cent on Monday, rising for the third consecutive session.
2. Rally in banking stocks
A rally in banking stocks is also boosting the benchmarks, as IT and banking stocks together hold nearly 50 per cent of the index’s weight.
The Nifty Bank index has been rising for four consecutive sessions, with a cumulative increase of over 3 per cent. A status quo on policy rates and stance by the Reserve Bank of India has allayed immediate concerns about margin pressure on banking players.
“I think the RBI policy was quite constructive. From that perspective, BFSI has started performing well. Additionally, the IT sector is witnessing some short covering. Together, these two sectors make up nearly 50 per cent of the index, which is a major reason behind the market movement,” said Pankaj Pandey, the head of research at ICICI Securities.
3. RBI policy boost
The RBI’s monetary policy was on expected lines, which seems to have comforted the market. The projection of favourable growth-inflation dynamics and the dovish tone of RBI Governor Sanjay Malhotra influenced market sentiment.
The RBI has raised India’s FY26 GDP growth estimates to 6.8 per cent from the previously projected 6.5 per cent. On the other hand, the central bank has revised the inflation forecast downward to 2.6 per cent for FY26 from the earlier projected 3.1 per cent.
“Most of the announcements were broadly in line with expectations, with the policy maintaining the status quo. Several announcements related to fundraising and provisioning norms are likely to have a beneficial impact on the BFSI segment,” Pandey said.
4. Focus on Q2 earnings
Hopes are high that the worst in terms of quarterly earnings is behind us, and that earnings will see a healthy rebound from the third quarter onwards – a trend that could be signalled by upbeat management commentary during the Q2 results season.
“Investors now look to Q2FY26 earnings for guidance; though expectations remain moderate, the market is more optimistic regarding Q3 results, led by a rise in consumer demand,” said Nair.
According to brokerage firm Motilal Oswal Financial Services, the earnings cycle is bottoming out, with growth likely to pick up into double digits.
Motilal expects quarterly PAT growth of 12 per cent year-on-year (YoY) each in Q3FY26 and Q4FY26 and annual PAT growth of 11 per cent and 14 per cent YoY in FY26 and FY27, respectively.
“The earnings cut cycle has already started to ease, with the latest quarterly cuts at a more modest, nearly 1-2 per cent range,” said the brokerage firm.
5. Valuations now reasonable
Experts highlight that valuations of the benchmarks have reached reasonable levels, and this should prompt a shift in the stance of foreign investors.
Foreign institutional investors (FIIs) have been on a selling spree of Indian stocks in the cash segment since July this year, driven by weak earnings, stretched valuations, the rupee’s weakness, and US tariffs.
“Valuations are reasonable, with Nifty trading at 20.6 times in line with long-period average, and any evidence of earnings growth pickup should help valuations expand,” said Motilal Oswal.
“We believe that the cavalry of measures by the government will help to reset the trajectory of corporate earnings as domestic reforms are expected to continue, while any resolution of the tariff stalemate will be a key external catalyst in our opinion,” Motilal Oswal said.
“We see potential for further market upside, especially in an environment characterised by improving corporate earnings growth, low interest rates, ample liquidity, and macroeconomic recovery,” said the brokerage firm.