Nifty’s Eight-Session Rally, Can It Sustain?

After a phase of notable selling pressure, domestic markets staged a steady recovery, moving on an uninterrupted upward trajectory over the past fortnight. The Nifty 50 marked its longest winning streak in four months, posting eight consecutive sessions of gains. Nifty VIX dropped about 14 per cent during the period, signalling easing volatility expectations and a steadier near-term outlook. Multiple triggers supported this renewed investor optimism.[EasyDNNnews:PaidContentStart]

On the domestic front, GST rate cuts provided a boost to sentiment, while globally, expectations of a potential U.S. rate cut added to the positive momentum. Additionally, improving prospects for trade negotiations between India and the U.S., reinforced by President Trump’s remark describing Prime Minister Narendra Modi as a “very good friend,” further lifted market confidence. A successful trade deal with the U.S. could improve export prospects for Indian companies and reduce tariff-related uncertainties.

It would also strengthen bilateral economic ties, boosting investor confidence in India’s long-term growth story. Also, a potential U.S. Fed rate cut would ease global liquidity conditions, making emerging markets like India more attractive for foreign inflows. As optimism took hold, the benchmark indices BSE Sensex and Nifty 50 surged 2.63 per cent and 2.81 per cent, respectively, over the fortnight.

The upbeat momentum was not confined to Large-Caps alone, as the broader markets echoed the rally, with the BSE Mid-Cap and BSE Small-Cap indices delivering strong gains of 3-4 per cent each during the same period. On the sectoral front, the rally was broad based with all indices closing in the green. Metals and auto stocks were at the forefront, attracting robust buying interest from investors. Their strong performance drove sectoral indices higher by 7-8 per cent in just two weeks, underscoring the depth of the market rebound.

The past fortnight witnessed a strong rebound, with the Nifty 50 recording its longest winning streak in four months. What fuelled this rally?

The auto sector extended its positive momentum, driven by expectations of stronger sales growth, as favourable GST reforms bolstered demand prospects across key vehicle segments. Metal stocks climbed strongly as China’s output curbs improved global pricing power, while India’s supportive trade policies, expectations of a U.S. Fed rate cut, and strengthening demand outlook across autos and infrastructure boosted investor confidence.

In other developments, India’s retail inflation quickened to 2.07 per cent in August as food prices edged higher month-on-month, though it remained comfortably within the RBI’s tolerance band, keeping the door open for another rate cut this year. Foreign institutional investors (FIIs) withdrew over ₹9,000 crore during the period, lower than in previous bouts of selling, while domestic institutional investors (DIIs) provided firm support, injecting more than ₹27,000 crore into equities. Stay tuned for further updates!

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