Sensex jumps above 82,000, Nifty soars past 24,750 today; key factors why markets rebounded ahead of RBI policy

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26 Aug, 2025 12:21

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Indian equity markets staged a strong rebound on Thursday with Sensex topping 82,000 intraday, lifted by renewed buying in heavyweight stocks and a positive global outlook after US Federal Reserve Chairman Jerome Powell's comment about the resilience of the US economy.

Strong inflows from foreign institutional investors (FIIs) and optimism ahead of the Reserve Bank of India's monetary policy decision tomorrow added to the market's strength.

At close, the BSE Sensex was up over 800 points, or 1 percent, at 81,765. NSE Nifty gained 240 points to end just above 24,700. Heavyweight IT stocks, led by TCS, Infosys, Wipro, and Tech Mahindra, spearheaded the rally, reflecting improved global sentiment and robust FII activity.

Buying in heavyweight stocks lifts indices

The rebound in markets was largely driven by strong buying in heavyweight stocks across sectors, with IT majors leading the charge. Stocks such as TCS, Infosys, Wipro, and Tech Mahindra rallied after Federal Reserve Chairman Jerome Powell's remarks suggested that the US economy is performing better than previously thought. The positive outlook for the world's largest economy bolstered risk sentiment globally, pushing investors towards equities.

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Among the top Nifty gainers, TCS and Infosys gained about 2.5 percent each. Titan, Trent, Dr Reddy's, Bharti Airtel were the other top gainers, rising 2-2.3 percent each. The broad-based recovery showed renewed investor confidence in blue-chip counters.

FII flows reverse after months of selling

Foreign institutional investors (FIIs) have turned net buyers in December, providing a significant boost to Indian equities. On Wednesday, FIIs purchased shares worth Rs 1,798 crore, following the net buying of Rs 3,665 crore on Tuesday. Month-to-date, FIIs have infused Rs 5,224 crore into Indian equities, a sharp reversal from their net outflows of Rs 1.6 lakh crore during October and November.

According to Kranthi Bathini, Director of Equity Strategy at WealthMills Securities, FIIs have also been unwinding short positions, which, coupled with consistent domestic institutional investments, has added liquidity to the markets. "Selling pressure from FIIs seems to be easing, and growth expectations are picking up for the second half of the fiscal," Bathini said.

Global and local macroeconomic optimism

The rebound in Indian markets mirrors a broader risk-on sentiment in global equities. The Dow Jones Industrial Average crossed the 45,000 mark for the first time, with the strength in the US markets driven by robust growth and cooling inflation, said V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services. “The Fed chief Powell’s remark yesterday that the 'economy is in remarkably good shape' is a shot in the arm for the US bulls,” he added.

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In India, optimism is also building around the domestic macroeconomic environment. Market participants are hopeful that the Reserve Bank of India may signal the start of a rate-cutting cycle, even if it does not announce one in its monetary policy review tomorrow. A Balasubramanian, CEO of Aditya Birla Sun Life Mutual Fund, said that the market is in a consolidation phase ahead of the RBI decision, with foreign inflows and clarity on US policy being key triggers for further momentum.

Outlook for markets

The Nifty has rebounded significantly from its recent low of 23,350 on November 21, with markets adopting a 'buy on dips' strategy, according to Bathini. Ample liquidity, improving global growth projections, and easing FII outflows are contributing to the recovery. However, market sentiment remains cautious as participants await the RBI's commentary on inflation, liquidity measures, and future rate actions.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.