Market Gains and Investor Wealth
Indian equity markets extended their winning streak to six consecutive sessions, marking the longest such run in a year. During this period, investors saw their wealth increase by approximately Rs 29 lakh crore as benchmark indices surged.
The BSE Sensex gained 6,063.98 points, or 8.27%, to close at 79,310.01. The NSE Nifty advanced 1,837.75 points, an increase of 8%, to finish at 24,536.60.
Despite the recent recovery, both indices remain in negative territory for the current fiscal year. As of the latest close, the Nifty50 is down 6.1% and the Sensex is down 6.9% in 2026.
Foreign Investor Activity
The rally was accompanied by significant inflows from foreign institutional investors (FIIs). On Wednesday, foreign investors purchased shares worth Rs 72.84 billion ($769.65 million), representing their largest single-day investment since October 2025.
This buying activity follows a period of substantial outflows, where FIIs had previously pulled out a record $29 billion from Indian equities.
Since October 16, foreign investors have been net buyers of Indian shares worth Rs 39,404 crore over 13 trading sessions.
Drivers of the Rally
Several factors contributed to the market's upward movement. The most significant driver was expectations of relief on long-term capital gains (LTCG) tax for investors.
Regulatory bodies and research firms have weighed in on the issue. SEBI has urged the government to consider removing LTCG tax for foreign investors, while SBI Research suggested it should be abolished for all classes of investors. Finance Minister Nirmala Sitharaman indicated openness to hearing views on the issue.
Other catalysts included a decline in oil prices following the Democrats' victory in the US midterm elections and a global rotation away from AI-related trades.
Earnings and Valuation Context
Nomura reported that normalized profit after tax for 134 companies in its BSE 200-plus universe increased 34% year-on-year in the second quarter of fiscal 2027, exceeding consensus estimates by 18%.
According to Nomura, most sectors are trading below their post-pandemic average valuations, creating an attractive entry point for foreign investors as corporate earnings improve and international headwinds ease.