Sensex jumps 1,000 points: What is driving today's market rally?
What's the story
The Indian stock market is on a major upswing today, with the BSE Sensex shooting over 1,000 points to 79,550 and the Nifty 50 crossing the 24,150-mark.
This is the fifth consecutive day of gains for India's top indices, which have reached their highest levels since January 6.
The total market capitalization of all BSE-listed companies has surpassed the $5 trillion mark for the first time in three months.
Banking boost
Banking stocks lead today's market rally
Today's market rally is primarily led by banking stocks, with the Nifty Bank index crossing the 55,000 mark for the first time.
HDFC Bank's shares jumped nearly 2% to a record high of ₹1,950.7, while ICICI Bank's stock surged about 1% to a record high of ₹1,436.
Such robust performances have bolstered investor confidence and led brokerages like Nomura to remain bullish on financials.
RBI impact
RBI's monetary policy and measures boost banking sector
The recent monetary policy changes of the Reserve Bank of India (RBI) have had a major impact on the banking sector.
The central bank has already delivered 50 bps of rate cuts in 2025, with another 100 bps expected by year-end.
Recent measures such as open market operations, variable rate repos, and forex swaps have eased liquidity conditions in the banking system.
FII influx
Foreign institutional investors' buying spree fuels market rally
Continuing their buying spree, foreign institutional investors (FIIs) emerged as net buyers today, having bought equities worth ₹4,668 crore on April 17.
Over the last three sessions, foreign portfolio investors (FPIs) have turned positive on Indian equities on the back of a weakening US dollar and optimism over India's growth prospects.
The foreign influx has given the market rally an added momentum.
Dollar effect
Weakening US dollar and tariff exemptions boost investor sentiment
The US dollar's fall to a three-year low against major currencies has further propelled Indian equities.
A weaker dollar generally lowers India's import costs and increases foreign capital flows into emerging markets like India.
Further, US President Donald Trump's decision to postpone additional tariffs on 75 countries including India until July 9 has further improved investor sentiment by easing fears of potential export disruptions.
Oil impact
Falling oil prices provide relief to Indian market
The fall in oil prices by over 1.5% today has also come as a relief for the Indian market.
Brent crude futures fell $1.10, or 1.6%, to $66.86 a barrel after a 3.2% gain on Thursday.
For India, which heavily depends on oil imports, lower crude prices come as a major relief, easing pressure on the current account deficit and moderating inflationary pressures in the economy.