Indian stock markets soared to fresh lifetime highs on Thursday, with both the Nifty 50 and Sensex scaling new peaks after nearly 14 months. Strong domestic liquidity, stable macro fundamentals, and renewed earnings optimism helped markets shrug off global turbulence.
The Nifty 50 surged over 105 points (0.4%) intraday to touch a new record high of 26,310, surpassing its previous peak of 26,277 from September last year.
Meanwhile, the Sensex climbed over 446 points (0.5%) to cross the historic 86,000 mark for the first time.
However, some gains were trimmed by market close.
- Nifty ended at 26,215.55, up 10 points (0.04%)
- Sensex closed at 85,720.38, up 111 points (0.13%)
Analysts pointed to four major reasons behind this sharp upward move.
1. Strong Domestic Inflows Continue to Power Markets
Despite uncertainty from the US over renewed tariffs and geopolitical tensions, analysts say domestic liquidity remains the strongest pillar of the Indian market.
- Retail investors and SIP flows remain at record highs, reducing dependency on FIIs.
- Domestic buying has helped cushion earlier foreign outflows.
- Banks remain well-capitalised, corporate earnings resilient, and GDP growth steady.
Analysts note that Indian investors are no longer reacting nervously to global headlines, providing the market with a firm base.
Festive demand recovery, strong sales in autos and consumer durables, and optimism around GST relief have further supported sentiments.
2. Solid Macro Fundamentals Keep India Ahead
India’s macro indicators continue to paint a stable and growth-oriented picture.
Key positives include:
- Stable inflation levels
- Healthy forex reserves
- Strong manufacturing trends
- Narrowing current account deficit
The International Monetary Fund (IMF) recently reaffirmed that India will remain one of the world’s fastest-growing major economies, supported by structural reforms and domestic spending.
While the IMF now expects India to touch the $5 trillion GDP mark by FY29, analysts believe the economic trajectory remains strong and predictable — something global investors value highly.
3. Earnings Recovery Boosts Market Sentiment
Corporate India’s Q2 (Sept quarter) results have been encouraging, with many sectors reporting double-digit profit growth.
Beneficiary sectors include:
- Automobiles
- Banking & Financials
- FMCG
- Discretionary consumption
RBI’s stable policy stance and the government’s capex drive have improved profitability and demand visibility.
Early earnings recovery signs and expectations of stronger results in H2 FY26 have kept markets optimistic.
4. Easing Valuations Make India Attractive Again
After peaking in September 2024, the Nifty corrected nearly 17% in early 2025 — a healthy reset that made valuations more reasonable.
- MSCI India Index rose only 6% this year
- Other global indices gained 20–35%, reducing valuation premiums
- Large-cap valuations are now more attractive to foreign investors
As per analysts, consolidation over the last 14 months has narrowed the gap between earnings and price multiples, creating favourable entry points.
Currently, the Nifty trades at around 22.3x–22.7x FY26 forward earnings — slightly lower than earlier peaks.
Renewed FII interest, domestic demand resilience, and stable policies make India stand out among emerging markets.
Outlook: Can Markets Sustain This Rally?
Experts say the rally is built on strong domestic fundamentals, not speculative froth. As long as macro stability, earnings growth, and liquidity conditions remain supportive, the markets may continue to see buy-on-dip momentum.
However, global uncertainties — US policy decisions, oil prices, and geopolitical risks — remain key watchpoints.
For now, Indian equities appear well-placed to maintain upward momentum with healthy investor participation.
