Markets extend rally on auto, IT boost; Sensex gains over 450 pts, Nifty reclaims 25,000

Bajaj Auto, M&M, JSW Steel, Hindalco, and Trent were the top gainers on the Nifty.

Benchmark indices continued their upward momentum for a second consecutive session on May 26, buoyed by gains in auto, IT, and metal stocks. However, profit-booking emerged at higher levels after the Sensex surged nearly 600 points intraday.

At close, the Sensex was up 455.37 points or 0.56 percent at 82,176.45, and the Nifty was up 148.00 points or 0.60 percent at 25,001.15. The market breadth was positive as 2,212 shares advanced, 1,704 shares declined, and 184 shares were unchanged.

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Investor sentiment was supported by recent headlines of India emerging as the world’s fourth-largest economy and the Reserve Bank of India’s record dividend payout, which is expected to ease fiscal pressure.

"India’s economic rise and the RBI’s dividend windfall exceeding budget estimates should help keep the FY26 fiscal deficit target at 4.4 percent. This strengthens the macro environment, supporting low inflation and a declining interest rate trajectory—both favorable for equities," said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services. He, however, cautioned that potential geopolitical and trade risks from the US could trigger sudden volatility.

Volatility picked up during the session, with India VIX rising 4.28 percent to 18.02. Sectorally, the Nifty Auto and IT indices led gains, rising over 1 percent each. Realty, metal, FMCG, consumer durables, and energy stocks also supported the upmove. Banking stocks saw mild gains, with Nifty Bank and PSU Bank rising 0.16 percent and 0.13 percent, respectively.

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In the broader markets, the Nifty Midcap 100 added 0.70 percent, and the Smallcap 100 rose 0.4 percent.

Among key stocks, Eternal Ltd (formerly Zomato) slumped nearly 5 percent in early trade after reports of potential passive outflows of up to $840 million as MSCI and FTSE Russell plan to reduce its weight in global indices, according to IIFL Capital Services.

Tata Motors gained 1.5 percent after US President Donald Trump postponed a proposed 50 percent tariff on EU imports to July 9. This brought relief to its subsidiary Jaguar Land Rover, which had halted US shipments last month amid trade uncertainty.

Read more: Sluggish demand drags passenger vehicle sales down 25% YTD; industry braces for muted FY26 growth

Balkrishna Industries (BKT) tanked over 6 percent after a 25 percent YoY drop in March quarter net profit. Concerns over its aggressive capex plans and margin pressure prompted Nomura to downgrade the stock to 'neutral'.

Technical charts suggest that 25,000 on the Nifty and 82,300 on the Sensex are key resistance levels. A breakout above these could trigger a further rally towards 25,150–25,500 and 82,700–83,600, respectively, said Shrikant Chouhan of Kotak Securities. On the downside, support is seen at 24,600/80,900 and 24,450/80,500.

Top Nifty gainers included Bajaj Auto, M&M, JSW Steel, Hindalco, and Trent, while Eternal, Sun Pharma, UltraTech Cement, Power Grid, and Kotak Mahindra Bank were among the major losers.

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