Indian stock markets continued their upward momentum on Monday, with the Sensex and Nifty surging more than 1% for the sixth straight session. The rally was driven by strong performances in banking and energy stocks, along with renewed buying interest from foreign investors. The total market capitalisation of listed companies on the Bombay Stock Exchange (BSE) jumped by ₹5.08 lakh crore, reaching ₹418.38 lakh crore.
Banking and Energy Stocks Fuel Market Surge
Gains in financial and energy stocks played a key role in Monday’s market performance. Banking stocks advanced 1.4%, with Kotak Mahindra Bank rising 2.6% to its highest level since October 2021. The energy index climbed 1.5%, supported by a 5% jump in GAIL and a 2.5% gain in Gujarat State Petronet, following expectations of favorable gas transmission tariff revisions. Indraprastha Gas also saw a 3% rise.
Key Factors Behind the Rally
Foreign Investors Return to Buying Mode
After months of selling, Foreign Institutional Investors (FIIs) have started increasing their purchases, turning net buyers in three of the last four sessions. On March 21 alone, FIIs invested ₹7,470 crore in equities. Analysts believe this shift in sentiment has played a major role in boosting market confidence.
Strong Domestic Economic Trends
Despite concerns over U.S. tariffs set to take effect from April 2, India’s resilient economic fundamentals and reasonable stock valuations have encouraged investors to return. This change has triggered short covering, leading to sharp price increases. Analysts caution, however, that uncertainty around global trade policies remains a risk factor.
Falling U.S. Treasury Yields
A decline in U.S. Treasury yields has also contributed to the market rally. The 10-year U.S. Treasury yield has dropped nearly 40 basis points from its February peak, making emerging markets like India more attractive for investors.
Technical Indicators Signal Uptrend
Market trends have also been reinforced by technical signals. Nifty has broken key resistance levels and closed above important moving averages, suggesting strong momentum. Analysts highlight a decisive breakout from a Falling Channel pattern, indicating further upside potential, with 23,800 and 24,000 as the next targets, while 23,200 and 23,000 provide key support levels.
While the rally is expected to continue, analysts anticipate a more measured pace, with possible short-term consolidation. Investors are advised to adopt a cautious approach, using dips as buying opportunities.