Benchmark indices experienced a powerful recovery rally on Friday, driven by strong buying activity across several key sectors, including banking, financial services, information technology (IT), and energy. This rally was further amplified by a sharp recovery in Adani Group stocks, which played a key role in lifting the broader market sentiment and propelling indices higher, resulting in a surge that boosted investor confidence.
By 2:57 PM, the BSE Sensex surged by an impressive 2,039.44 points, reaching a significant level of 79,195.23, while the NSE Nifty50 jumped by 587.90 points, trading at 23,938.75. This remarkable performance resulted in a substantial rise in the market capitalization of the BSE, which increased by a staggering Rs 7 lakh crore, underscoring the strength and resilience of the market. The rally was a welcome sign for investors who had been cautious in recent weeks amid heightened volatility.
Sectoral Strength Drives the Rally The rally was spearheaded by the banking and financial sectors, with banking giants such as ICICI Bank and State Bank of India (SBI) showing significant gains. This was complemented by strong performances from major IT companies, including Infosys and Tata Consultancy Services (TCS), which are some of the largest companies by market capitalization in India. Reliance Industries, a dominant player in the energy sector, and infrastructure leader Larsen & Toubro (L&T) also contributed notably to the surge, with both stocks seeing solid increases in their prices.
This broad-based rally across key sectors reflected a revival of investor sentiment, which had been weighed down by uncertainty in the previous weeks. As such, the strong performance of banking, IT, and energy stocks helped the market recover, with each sector showing positive momentum. The gains were underpinned by optimism that the economic recovery would continue despite challenges faced by certain industries.
Vishnu Kant Upadhyay, AVP - Research and Advisory at Master Capital Services, commented on the significant market recovery, stating, “The key benchmark indices witnessed a significant rebound, with the Nifty50 gaining over 500 points and the BSE Sensex surging by 2,000 points. This recovery was marked by a sharp rebound above the critical 200-day Exponential Moving Average (EMA), supported by strength in banking and IT stocks.” Upadhyay added that “bargain hunting in heavyweight stocks at attractive valuations” was a key driver of the rally, and noted that the rising dollar index also made IT stocks more appealing to investors.
Political Developments Fuel Market Optimism Investor sentiment was further supported by favorable political developments. Exit polls from the Maharashtra election, which suggested a likely victory for the Mahayuti alliance (a coalition of regional and national parties), helped boost market optimism. If the exit poll results hold true, this would mark the second consecutive state assembly win for the BJP-led National Democratic Alliance (NDA), following their win in Haryana. Investors interpreted this as a positive sign for the government’s capital expenditure plans, which could potentially lead to stronger economic growth in the future. Such political stability is often seen as a critical factor in maintaining investor confidence, especially in an emerging market like India.
Recovery in Adani Group Stocks Boosts Confidence Another key highlight of Friday’s market performance was the significant recovery in Adani Group stocks, which had come under intense pressure in recent months due to various controversies and allegations. However, on Friday, stocks of flagship companies like Adani Enterprises gained 2.5%, while other key players such as Ambuja Cement and ACC saw impressive gains of 6% and 4%, respectively. The recovery in these stocks came after the Adani Group dismissed allegations of bribery and fraud against its chairman, Gautam Adani, as “baseless.” This statement helped alleviate investor concerns and restored some level of confidence in the group’s prospects. The rebound in Adani stocks is a positive development, as it reflects that investor confidence in high-profile Indian conglomerates is beginning to recover after a period of uncertainty.
Market Activity and Institutional Investors The market breadth on Friday remained firmly positive, with 2,365 stocks advancing on the BSE, and 147 stocks reaching their 52-week highs. In contrast, 1,422 stocks declined, and 155 stocks remained unchanged. The positive market breadth is a sign that many stocks across the market, not just the high-cap blue-chip stocks, are benefiting from the rally.
Foreign institutional investors (FIIs) had sold shares worth Rs 5,320.68 crore in the previous session, but their selling was largely offset by net purchases from domestic institutional investors (DIIs), who made purchases worth Rs 4,200.16 crore. This highlights the critical role that domestic investors are playing in supporting the market, particularly as foreign investors exhibit caution in the current environment.
Sectoral Gains Highlight the Revival Sectoral indices reflected the broad-based strength in the market, with the Nifty IT, Nifty Financial Services, and Nifty Oil & Gas indices outperforming the broader market. These sectors posted gains ranging from 1.3% to 1.7%, emphasizing strong momentum in select segments. The IT sector, in particular, benefited from the rising dollar index, which enhanced the appeal of Indian IT stocks to foreign investors. The Financial Services sector, supported by strong performances from banks, also contributed significantly to the rally. Similarly, the Oil & Gas sector, bolstered by gains in Reliance Industries, added to the market’s upward trajectory.
Friday's strong market performance underscores a revival in investor sentiment, driven by sectoral strength, a recovery in high-profile stocks, and political stability. The positive developments, particularly in the banking, IT, and energy sectors, signal that the market may be on a firmer footing moving forward. Moreover, the recovery in Adani Group stocks, along with the positive outlook from exit polls, provides further evidence of investor confidence returning to the market. The combination of these factors has given the market a strong foundation for continued growth in the near term, despite the challenges posed by global and domestic uncertainties.
