Indian equity markets continued their winning streak on Monday, May 26, posting strong gains for the second consecutive session. The benchmark BSE Sensex climbed more than 750 points during intraday trade, while the NSE Nifty 50 reclaimed the 25,050 mark, reflecting robust investor sentiment.
The Sensex opened higher at 81,928.95 compared to its previous close of 81,721.08, and surged nearly 1% to touch an intraday peak of 82,492.24. Meanwhile, the Nifty 50 began the day at 24,919.35 and rose to a high of 25,079.20, also advancing close to 1%.
By 10 AM, the Sensex was trading at 82,414 — up 692 points or 0.85%, while the Nifty was at 25,053, a rise of 200 points or 0.80%.
Midcap and smallcap stocks also participated in the rally, with the BSE Midcap and Smallcap indices each gaining around 1%.
Investor wealth surged significantly as the total market capitalisation of BSE-listed firms expanded to over ₹445 lakh crore, up from nearly ₹442 lakh crore in the previous session — an increase of over ₹3 lakh crore in a single day.
Key Drivers Behind the Market Rally
Here are five prominent factors contributing to the positive market momentum:
1. Delay in EU Tariffs by the US
Market sentiment received a boost after US President Donald Trump postponed the imposition of 50% tariffs on European Union imports. The deadline, originally set for June 1, has been extended to July 9 following a conversation with European Commission President Ursula von der Leyen. The decision signals a willingness to negotiate, easing global trade concerns. India, which relies on EU as a key trade partner — particularly for goods routed to the US — stands to benefit from this development.
2. Record RBI Dividend
The Reserve Bank of India recently announced a record dividend payout of ₹2.69 lakh crore to the central government for FY25 — the highest in its history. This windfall is expected to strengthen government finances and help maintain the fiscal deficit target of 4.4% for FY26. Market analysts suggest this move could support lower inflation and potentially pave the way for interest rate cuts, further energizing equity markets.
3. Weakening US Dollar
A continued slide in the US dollar index over the past three sessions has improved investor sentiment across emerging markets. A weaker dollar typically attracts foreign investments into countries like India, as returns become more attractive in local currencies.
4. Supportive Macroeconomic Indicators
India’s economic fundamentals remain solid. With inflation moderating and the Reserve Bank potentially eyeing rate cuts, the economic outlook is optimistic. The country is projected to report 6.9% GDP growth for Q4 FY25, driven by a resilient services sector and robust agricultural output. NITI Aayog CEO BVR Subrahmanyam recently highlighted that India has surpassed Japan to become the world’s fourth-largest economy — with ambitions to overtake Germany in the near future.
5. Rising Retail Participation
A continued surge in retail investor participation is lending further support to the market’s momentum. Over six lakh new investors entered the stock market just last week, according to data cited by market experts. This growing base of retail investors is helping stabilize and sustain market rallies.
With a combination of strong macroeconomic fundamentals, supportive policy developments, and rising investor participation, the Indian equity markets appear poised for continued growth. Analysts remain optimistic about the near-term trajectory of domestic stocks, bolstered by both global cues and local resilience.
