During India’s annual Diwali ‘muhurat’ trading, the NSE Nifty 50 and BSE Sensex indices showed a notable uplift, rallying on the back of renewed investor confidence and festive optimism.
Both indices bounced back after two days of losses, with Nifty 50 rising by 0.41% and Sensex by 0.42%, showcasing positive investor sentiment as the holiday period fuelled a surge in demand.
All 13 major sectors marked gains, and auto stocks led the rally, with Mahindra & Mahindra notably jumping by 3.27%, reflecting its 25% sales increase in October.
Festive demand drives Nifty 50 and Sensex gains by over 0.4%
The festive boost was evident across all sectors, with mid-cap and small-cap indices rising by nearly 0.7% and 1% respectively.
The gains were largely propelled by the auto sector, as manufacturers reported heightened sales linked to Diwali demand.
Despite recent underperformance in October, which was the toughest month for these indices since March 2020, the Diwali trading session highlighted resilience within the Indian stock market.
Companies like NCC saw a rise of 4.6% following lucrative contract wins, while certain sectors like healthcare saw mixed responses, with Narayana Hrudayalaya dropping by 2%.
This year’s Diwali trading session offered a welcome break from an otherwise challenging October.
With foreign investors pulling out amid subdued earnings, Indian benchmarks experienced significant losses, underscoring the market’s sensitivity to both local and global factors.
While Diwali optimism provided a brief respite, analysts caution that sustaining this momentum will depend on various factors, including corporate earnings and the return of foreign investment.
What’s next for India’s stock market?
While the Diwali rally brought cheer to investors, the Indian stock market remains at the mercy of both domestic and international pressures.
Upcoming indicators like US non-farm payroll data, as well as the US presidential elections, will likely influence investor sentiment in the coming weeks.
On the home front, corporate earnings and foreign investment inflows will play a critical role in maintaining upward momentum post-Diwali.
The auto sector emerged as the top performer during the Diwali trading session, with Mahindra & Mahindra leading the way.
Analysts note that sustained growth in this sector will require continued demand, which could face headwinds if global economic pressures persist.
The festive demand boost reflects positive sentiment, but with foreign investment flows showing caution, the market’s near-term path remains uncertain.
Mid-cap and small-cap stocks also saw a strong boost, with many investors optimistic about long-term growth prospects, supported by favourable domestic policies.
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