Nifty is trading close to its all-time high as strong buying from domestic investors and global market support boosts bullish sentiment. Find out who is driving the rally and why bears are exiting.
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After a long 14-month pause, the Nifty and Sensex are finally back within touching distance of their record highs and may well scale new peaks in the coming sessions. Following today’s close, the Nifty is now less than 100 points shy of its all-time high of 26,277 set on September 27, 2024, while the Sensex is just about 300 points short of its peak of 85,978.25 recorded the same day. Months of relentless FII selling, trade jitters and geopolitical uncertainty, experts say the clouds finally seem to be lifting for Indian equities, and all the indicators now point to one thing: a sustained rally.
Fundamental Support
At the fundamental level the picture of ‘strong macros but weak micros’ at the beginning of the year is changing to ‘strong macros and improving micros’. “This fundamental support is aided by the change in perception towards India by leading global banks who now consider India fairly valued and buyable in the context of a resilient economy and improving corporate earnings.
To be sure, FIIs turning buyers in the cash market yesterday is a reflection of this changing perception towards India. Investor optimism is also high as the government signaled that an India–US trade pact is nearing completion, with both sides close to resolving tariff-related issues. A smoother trade framework could boost export-oriented and globally linked sectors.
Valuation
But experts say that India’s anticipated policy pivot is the biggest driving force. “Following their worst underperformance in three decades, we see Indian equities regaining their mojo in 2026. Policy has pivoted, supporting a strong recovery in nominal growth, which should take earnings growth out of the mid-cycle slowdown experienced over the past 12 months,” global investment firm Morgan Stanley said in a recent note, further stating that valuation comfort has increased amid lightest FPI exposure in history.
In a bold move, Morgan Stanley has set the Sensex bull case target at 107,000 by December 2026, projecting the benchmark index to surge by nearly 26% from current levels if macroeconomic and policy tailwinds remain favourable.
Earlier this month, Goldman Sachs struck a similar tone when it upgraded India to Overweight and projected the Nifty to reach 29,000 by December 2026, an upside of about 11% from current levels. The firm said Indian equities, which lagged global peers through 2024, are now setting up for a reversal, backed by firmer policy support, improving profit trends and easing macro pressures.
RBI Actions
Potential RBI actions such as rate cuts, better liquidity, bank deregulation, along with GST tweaks and a slower pace of fiscal consolidation, are likely to help drive a broad-based rebound over the next two years.
The brokerage also noted that India’s prolonged earnings downgrade phase seems to have run its course, with recent quarters outperforming expectations. It now expects MSCI India’s earnings growth to improve from 10% this year to 14% next year, aided by stronger nominal growth and continued corporate cost efficiencies.
Lastly, the government’s signal that an India–US trade pact is nearing completion, with both sides close to resolving tariff-related issues, is also a significant boost for the market. A smoother trade framework could boost export-oriented and globally linked sectors.
The S&P BSE Sensex rose 450 points, or 0.53%, to close at 85,636.28, while the NSE Nifty 50 gained 139 points, or 0.54%, to end at 26,192. In today’s session, both hit fresh 52-week highs.
Gains on the 30-stock Sensex were led by Bajaj Finance, Bajaj Finserv, Reliance Industries, Tech Mahindra, HDFC Bank, and Axis Bank.
Beyond the blue chips, mid-caps edged up 0.2%, while small-caps ended flat, underscoring a more cautious tone in the broader market.
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This article is intended for educational purposes only. The views and opinions expressed are those of individual analysts or brokerage firms and do not represent the views of GoldSilverReports.com. Investors are strongly advised to consult certified financial experts before making any investment or trading decisions.