The benchmark indices rallied sharply on Monday, with the Sensex jumping over 700 points and the Nifty reclaiming the 25,000-mark, as global and domestic cues lifted investor sentiment.
Sensex surged 771.16 points or 0.94 percent to an intraday high of 82,492.24, while the broader Nifty climbed 226.05 points or 0.90 percent to 25,079.20. However, later both the headline indices pared gains with Sensex trading at around 82,092.64 and Nifty at 24,954.45, at around 10:30 AM.
Mahindra & Mahindra, Tata Motors, Hero MotoCorp, Nestle India and Bajaj Auto were among top gainers, rising up to 2 percent.
Key drivers of Monday’s market rally:
1) US tariff delay eases global worries: Investor confidence received a boost after US President Trump agreed to delay the proposed 50 percent tariffs on European Union goods. The new deadline for negotiations has now been set for July 9. The announcement helped soothe global markets.
2) India becomes fourth-largest economy: NITI Aayog CEO BVR Subrahmanyam on Sunday confirmed that India has moved past Japan to become the world’s fourth-largest economy, with its GDP now standing at USD 4 trillion. He added that India’s macroeconomic fundamentals remain strong and the global environment is turning increasingly favourable for the country.
3) RBI’s record dividend strengthens fiscal outlook: On Friday, the Reserve Bank of India announced a record dividend payout of Rs 2.69 lakh crore to the government for FY25, 27.4 percent higher than the previous year. The surplus transfer is expected to support the Centre’s fiscal position, especially at a time when geopolitical tensions and defence spending are mounting.
"News of India becoming the fourth largest economy in the world would be a near-term morale boost for the market. RBI's bumper dividend payment to the government, exceeding the budget estimates, will help contain the fiscal deficit target for FY26 at 4.4 per cent. This, in turn, can sustain the low inflation and declining interest rate trend which will continue to support the equity market," VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, said.
4) Firm trend in Asian markets: Positive cues from other Asian markets also supported the rally. South Korea’s Kospi and Japan’s Nikkei 225 traded in the green, while markets in Shanghai and Hong Kong remained subdued. Wall Street remains shut on Monday for Memorial Day
5) Sustained FII inflows: Foreign Institutional Investors (FIIs) remained net buyers of Indian equities, purchasing shares worth Rs 1,794.59 crore on Friday, as per exchange data. Continued foreign fund inflow is seen as a sign of confidence in India’s growth prospects.
6) Early arrival of monsoon: The southwest monsoon reached Kerala on Saturday, eight days ahead of schedule—the earliest in 16 years. A good monsoon season is critical for the country’s largely agrarian economy, with nearly half the farmland dependent on rainfall. The early onset has raised hopes of a healthy kharif crop and improved rural demand.
7) Rate cut hopes ahead of RBI policy: Expectations of another rate cut in the upcoming RBI Monetary Policy Committee (MPC) meeting added to market optimism. According to a poll by Moneycontrol, economists and treasury heads expect a 25-bps cut in the repo rate in the June 6 policy review, which would be the third consecutive cut after the February and April meetings.
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