Stock Market Rally: Sensex Gains Over 400 Points Amid Positive Sentiment

Sensex Rallies Over 400 Points on Fed Rate Cut, Strong Domestic Flows.

Benchmark equity indices opened higher on Friday, extending gains from the previous session as global cues improved and domestic sentiment stabilized. The S&P BSE Sensex surged over 400 points, while the Nifty approached the 26,000 mark, with broader indices also trading in the green amid easing volatility.

Why the Market is Rising
Analysts attribute the rally to renewed global risk appetite following the US Federal Reserve’s recent rate cut, which has raised hopes of stronger foreign inflows, better liquidity conditions, and a firmer rupee.

Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, highlighted the steady participation of domestic investors as a key support factor. Mutual fund SIP inflows have consistently exceeded ₹29,000 crore in the past three months, strengthening the role of Domestic Institutional Investors (DIIs) against Foreign Institutional Investors (FIIs).

While FIIs have sold equity worth ₹14,845 crore in December, DIIs have bought ₹36,097 crore, suggesting sustained domestic support even amid heavy FII outflows in FY26.

Global Cues and Sector Movements
Improved global sentiment, alongside the Fed’s rate cut, countered pressures such as the rupee hovering near 90.41 per USD and weak US market trends driven by concerns in the AI sector.

Among sectors, Vodafone Idea continued its upward trend on expectations of debt relief and network expansion. Shakti Pumps and Seamec also gained on project-related developments. Investors are watching India’s November inflation data, expected to remain within the RBI’s comfort range, which could influence expectations for future rate cuts.

Technical Outlook
According to Prashanth Tapse, Senior VP (Research) at Mehta Equities, the Nifty setup has turned positive, with support at 25,703 and potential to reclaim 26,000–26,326. The Bank Nifty shows similar strength, with upside targets around 59,800–60,200. Buy-on-dips remains the preferred strategy, with bullish patterns observed in stocks such as Cholamandalam Finance, Pondy Oxides and Chemicals, and Dredging Corporation. Grasim is flagged as a trading pick with targets between ₹2,901–₹3,151.

Investor Takeaways
With supportive global central banks, steady domestic inflows, and improving earnings visibility, market sentiment is stabilizing. However, movements in the rupee, FII flows, and upcoming inflation data will continue to influence short-term trading.