Nifty settles at record high, Sensex closes 550 pts higher: 6 key factors behind market rally

• Sensex and Nifty rose, tracking firm global cues and buying in large-cap stocks.
• Hindalco, Coal India, Bharat Electronics rose; ITC, Bajaj Auto fell.
• Nifty Auto index up for fourth session as December sales data boosts sentiment.

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The benchmark equity indices Sensex and Nifty settled higher on Friday, tracking firm global cues and strong buying interest in banking and metal shares.

The Sensex climbed 573.41 points or 0.67 percent to settle at 85,762.01. During the day, it jumped 623.67 points or 0.73 percent to 85,812.27.

The Nifty went up by 182 points or 0.7 percent to 26,328.55. During the day, it surged 193.45 points or 0.73 percent to reach an all-time peak of 26,340.

Hindalco Industries, Coal India and Bharat Electronics were the top gainers in the Nifty50 pack, rising up to 2 percent, while ITC and Bajaj Auto were the major laggards, declining up to 4 percent. Market breadth was positive as about 2183 shares advanced, 1204 shares declined and 165 shares unchanged.

"We expect earnings to beat, the RBI to keep its foot on deregulation, more reforms from the government and a potential trade deal with the U.S. in this quarter," Ridham Desai and Nayant Parekh, equity strategists at Morgan Stanley India in a note on Friday, reported Reuters.

Key factors behind market rise

1) Positive global cues: In Asian markets, South Korea’s Kospi, Shanghai’s SSE Composite and Hong Kong’s Hang Seng were trading in the positive territory. US futures were also higher by up to 0.7 percent, indicating a firm start for the Wall Street later in the day.

2) Buying in large-caps: Buying was seen in large-cap stocks, with Reliance Industries gaining nearly 1 percent for the second consecutive session.

"The monthly sales data from auto companies as well as business updates from other sectors signal a likely improvement in December quarter earnings, lifting markets...," G Chokkalingam, founder and head of research at Mumbai-based Equinomics Research told Reuters.

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3) Steady purchase by DIIs: A steady purchases by domestic institutional investors supported the market.

"Steady domestic institutional inflows continue to provide broader support, helping offset aggressive selling by foreign investors," Ponmudi R, CEO of Enrich Money, said.

A positive earnings season, followed by a favourable union budget and a potential trade agreement with the U.S., will act as the triggers to lift markets higher after the consolidation in 2025, Chokkalingam told Reuters.

4) Rupee rises: In the currency market, the rupee traded in a narrow range in the morning session and appreciated by 6 paise to 89.92 against the US dollar. Forex traders said the USD/INR pair is expected to remain range-bound as the 90 level is being protected by the Reserve Bank of India, even as positive domestic equities were offset by sustained foreign fund outflows.

5) Buying in auto shares: Auto shares extended their gains as companies began releasing their December sales numbers. The Nifty Auto index rose nearly 1 percent, marking its fourth straight session of gains.

VK Vijayakumar, Chief Investment Strategist at Geojit Investments, said "The impressive 25.8 % YoY increase in passenger vehicles sales in December bodes well for the auto industry. More importantly, this data confirms the growth momentum in the economy. It has to be watched whether this growth sustains, albeit at a slower pace, going forward. It is hugely important that the growth momentum in the economy sustains, because that alone can ensure the much needed earnings growth that the market needs to remain resilient and gradually move up."

6) Buying in Bank shares: Bank shares attracted strong buying interest on Friday after positive business updates for the December quarter, lifting the Bank Nifty index to a fresh record high. The Bank Nifty rose 0.73 percent to hit an all-time high of 60,152.35, surpassing its previous peak of 60,114.30 recorded on December 1, 2025. The Nifty PSU Bank index advanced 1.08 percent, while the Nifty Private Bank index gained 0.56 percent. Both indices touched fresh lifetime highs during the session.

Technical Analysis

Ajit Mishra – SVP, Research at Religare Broking, noted "As anticipated, the Nifty has decisively crossed the key resistance at 26,200 and moved to a fresh record high. The prevailing trend remains positive, with the index now poised to gradually test the 26,500–26,700 zone in the near term."

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