In a completely unexpected development, the Sensex shot up by over 650 points while the Nifty 50 was just short of the 25,000 level on Thursday, completely going against the global market, which was down due to the escalated tensions between Israel and Iran. At a time when investors usually react with volatility to news that is geopolitical instability in the market, the Indian shares were not only resistant but were also bullish.

So, what is the reason for this unanticipated rally?

5 Key Reasons Behind the Market Upsurge

Strong Domestic Macro Data

India’s recently published economic indicators demonstrated remarkably robust performance:

• The manufacturing PMI was still in growth territory
• GST collections amounted to ₹1.82 lakh crore — a monthly record
• Retail inflation slightly fell and therefore rate cut hopes were boosted

Thus investor confidence in India’s domestic growth story was reaffirmed.

The Resilient Corporate Earnings

FY25 Q1 earnings are booming in the auto, infra, and banking sectors.

• The auto stocks went up on sales that were better than expected
• PSU banks and private lenders recorded improved NIMs and asset quality

FII Buying Returns

Without being empathy to foreign outflows in May, foreign institutional investors (FIIs)were net buyers this week, finding Indian equities to be undervalued for the long term, particularly midcaps and financials.

Crude Oil Pullback

Despite the Middle East turmoil, Brent crude prices dipped below $82, hence, inflationary worries were eased for oil-importing countries like India. This led to the activation of sectors sensitive to input costs such as FMCG and transport.

Market Technicals & Short Covering

From a technical point of view, Nifty got good support around 24,300 at the beginning of the week. The short covering and fresh long positions in large-cap stocks that were done today are the reason for the rally.

Sector Winners Today:

• Banking & Financials: ICICI Bank, SBI, Axis Bank went up 2–3%
• Auto: M&M and Tata Motors kept their positive trend
• Infra & Capital Goods: L&T and Siemens were again in buyers’ focus

Expert View

“The market is exhibiting phenomenal internal strength. Investors have turned their attention more to India’s macro story and less to the short-term global noise,” Ruchir Bhansali, equity strategist at Angel One, said.

Outlook

Geopolitical risks are still looming as a threat in the background, domestic fundamentals and institutional support are the main drivers of sentiment at the moment. If Nifty makes a clear break above 25,000, a fresh uptrend can be expected — subject to non-aggravation of global tensions.