Diwali fireworks on D-Street: Sensex rises over 1,000 points; top reasons for rally

Friday brought a record-breaking surge in India's stock markets, with the BSE Sensex surging over 1,000 points and the Nifty50 breaching 24,700. The rally began with festive Diwali fireworks on Dalal Street, marking the seventh consecutive day of market gains. At the close of trading, Nifty50 was trading at 24,747.40, up 211 points, while the BSE Sensex reached 80,336.05, up 1,026 points.

Global equities, on the other hand, suffered a sharp sell-off following US President Donald Trump's loss in the midterm elections. This contrasted with the strong performance of frontline stocks, with the Nifty Smallcap 250 index falling almost 1.5% and the Nifty Midcap 100 index slipping more than 1% on Friday morning. Market breadth turned negative, with 2,236 stocks declining against 937 advancing, and 99 remaining unchanged.

Foreign institutional investors stepped up their purchases of Indian equities, recording net buying worth Rs 14,975 crore, marking their largest single-day net investment in years. This influx of capital came amid hopes of relief on the long-term capital gains tax front and concerns over stricter regulation of the artificial intelligence industry following the US midterm elections.

Strong earnings results from large-cap companies, including Mahindra & Mahindra, which reported impressive second-quarter results, have also bolstered market sentiment. Analysts believe India's domestic AI industry could benefit from the reversal of investment flows as enthusiasm for AI stocks wanes.