Indian Benchmark Indices Open Sharply Higher Post-Diwali as FII Inflows Cross ₹53,170 Crore

Indian benchmark indices opened sharply higher on Wednesday after remaining closed on Tuesday for Diwali Balipratipada. The Sensex gained over 1,166 points, while the Nifty 50 crossed the 25,350 threshold in early trade, supported by gains in the aviation, auto, insurance, and telecom sectors.

The Sensex, which previously closed at 81,106.65 on Monday, opened at 82,248.68 and traded at 82,273.19, reflecting an increase of 1,166.54 points or 1.44 per cent as of 9:19 AM. Similarly, the Nifty 50 opened at 25,337.80 and stood at 25,352.45, up 307.80 points or 1.23 per cent from its previous close of 25,044.65.

Top gainers on the Nifty 50 included IndiGo, which rose 3.49 per cent to ₹5,619.40, and Mahindra & Mahindra, which gained 3.17 per cent to trade at ₹3,394.80. SBI Life Insurance, Asian Paints, and Bharti Airtel also registered notable increases. In contrast, Hindalco Industries and Nestlé India were among the few stocks trading in the red, falling 0.39 per cent and 0.25 per cent respectively.

Market analysts attribute the ongoing rally to foreign institutional investors (FIIs) returning to Indian equities. VK Vijayakumar, Chief Investment Strategist at Geojit Investments Ltd., noted that the Nifty 50 surged by 8.6 per cent in just six trading days of the month, driven largely by FII buying amounting to ₹53,170 crore. On Monday alone, FIIs made net purchases worth ₹7,212 crore, offsetting domestic institutional investors (DIIs) who recorded their eighth consecutive session of net selling at ₹7,172 crore.

Fundamental support has come from corporate earnings. Nifty 50 companies reported nearly 24 per cent earnings growth in the second quarter, marking a 12-quarter high and bringing forward price-to-earnings (PE) ratios to fair levels. FII buying is anticipated to continue across banking, financials, telecom, capital goods, select auto, and pharmaceutical stocks.

An additional macroeconomic relief came from a sharp fall in crude oil prices. Brent crude traded near $92 per barrel, marking a decline of over six per cent across two sessions following updates regarding US-Iran discussions. Meanwhile, Asian markets showed broad positive momentum, with Japan’s Nikkei 225 rising 1.2 per cent and South Korea’s Kospi gaining 1 per cent.

Despite the positive open, market experts have advised caution against chasing early gains. Shrikant Chouhan, Head of Equity Research at Kotak Neo, suggested booking profits on existing long positions if indices reach the 25,300 to 25,500 range, recommending a buy-on-dips approach instead. Technical analysts also pointed out overbought conditions, with the Nifty's Relative Strength Index (RSI) at 77.88, indicating that consolidation or profit-booking may occur before subsequent directional moves.

Global headwinds persist, particularly from the United States, where inflation figures exceeding expectations have increased the likelihood of Federal Reserve rate hikes and pushed the 10-year US Treasury yield close to 5 per cent. These macroeconomic factors, alongside domestic profit booking, remain variables monitored closely by market participants.

"The recent surge in Indian markets highlights the strong correlation between foreign institutional capital inflows and macroeconomic tailwinds like declining crude prices. However, with technical indicators pointing toward overbought conditions and persistent global inflationary pressures, investors should exercise caution. Adopting a disciplined buy-on-dips strategy rather than aggressively chasing short-term opening momentum remains a prudent approach in the current market environment." — Dr. Shishir Gupta, Founder & CEO, StartupLanes