Nifty 50 Erases 2025 Losses as Foreign Investors Return, Markets Rally
India’s stock market made a strong comeback, wiping out its 2025 losses after six consecutive days of gains. The Nifty 50 rose 1.32% to close at 23,658.35, while the Sensex climbed 1.4% to 77,984.38. With this rally, Nifty is now up 0.06% for the year, while Sensex remains slightly down by 0.2%. Analysts see this recovery as a sign that the worst may be over.
Investor sentiment improved due to signs of cooling inflation and better industrial production data. Over the past six trading sessions, both the Nifty 50 and Sensex have jumped 5.6% but remain about 10% below their record highs from late September. Foreign investors, who had been selling since September, have returned as buyers in three of the last four sessions.
Financial stocks, which hold the highest foreign investments, led the rally, with the Nifty Financial Services index rising 2%. Kotak Mahindra Bank surged 4.7% after appointing Bhavnish Lathia as its new Chief Technology Officer. While the market rally has been impressive, some investors remain cautious, as the volatility index spiked to 13.7%, suggesting hedging against possible corrections. Small-cap and mid-cap stocks also gained 1.1% and 1.3%, respectively. Major companies such as Reliance Industries and HDFC Bank saw notable gains, while SML Isuzu surged 4.5% on reports that Mahindra & Mahindra is in talks to acquire full control of the company.
Nifty 50 Erases 2025 Losses as Foreign Investors Return, Markets Rally
India’s stock market has made a remarkable comeback, erasing all its 2025 losses after a six-day winning streak. This rebound, driven by renewed foreign investor interest and bargain-hunting ahead of corporate earnings, signals growing confidence among market participants.
On Monday, benchmark indices posted strong gains. The NSE Nifty 50 surged 1.32% to close at 23,658.35, while the BSE Sensex jumped 1.4% to 77,984.38. With this rally, the Nifty is now up 0.06% for the year, although the Sensex remains slightly negative, down 0.2%. Analysts see this recovery as an indication that the market may have weathered the worst of its recent slump. Narendra Solanki, Head of Research at Anand Rathi, emphasized that Nifty’s ability to erase losses demonstrates resilience and a potential shift in market sentiment.
Key Drivers of the Rally
The resurgence is supported by encouraging economic indicators, including easing inflation and stronger industrial production data. These factors have boosted investor optimism, prompting bargain hunters to take advantage of undervalued stocks ahead of earnings season. Over the past six sessions, both the Nifty and Sensex have gained 5.6%, though they remain approximately 10% below their September 2023 peaks. Foreign institutional investors (FIIs), who had been selling Indian equities since late last year, have reversed course, turning net buyers in three of the last four trading sessions.
Financial Stocks Lead the Charge
The financial sector, which holds the highest share of foreign investments, played a key role in the rally. The Nifty Financial Services index surged 2% on Monday, contributing more than half of the Nifty’s overall gains. Kotak Mahindra Bank led the pack, soaring 4.7%—its highest level since October 2021—after appointing Bhavnish Lathia as its new Chief Technology Officer. This strategic move highlights the bank’s commitment to strengthening its digital infrastructure, which resonated positively with investors.
Caution Amid the Rally
Despite the strong momentum, some investors remain cautious about a potential correction. The India VIX volatility index, often referred to as the “fear gauge,” spiked 13.7%—its sharpest rise since January—indicating increased hedging activity to manage risks. Analysts warn that while the market’s rebound is encouraging, factors such as global economic uncertainties and domestic earnings performance could trigger short-term volatility.
Broad-Based Gains Across Sectors
All major sectors ended the session in positive territory, reflecting widespread optimism. Small-cap and mid-cap stocks, often seen as indicators of domestic investor sentiment, rose 1.1% and 1.3%, respectively. Market heavyweights Reliance Industries and HDFC Bank also contributed to the gains, climbing around 2% and 1.7%. Meanwhile, automaker SML Isuzu surged 4.5% following reports that Mahindra & Mahindra is in talks to acquire full ownership of the company, fueling investor interest in the automotive sector.
Looking Ahead
Market experts believe the recovery highlights India’s economic resilience and the growing appeal of its equities to global investors. However, the market’s future trajectory will depend on upcoming corporate earnings, inflation trends, and global economic conditions. While the recent rally has provided a boost in sentiment, investors are advised to remain vigilant, balancing opportunities with potential risks in an evolving market landscape.
In summary, India’s stock market resurgence reflects a combination of foreign capital inflows, improving economic data, and strategic bargain-hunting. While challenges persist, the recovery suggests renewed confidence in the country’s growth prospects, setting the stage for cautious optimism as earnings season unfolds.