Near record highs again: Why Nifty-Sensex created Rs 4 lakh crore wealth in a day

A Rs 4.23 lakh crore surge in investor wealth in a single session pushed the Sensex and Nifty to within touching distance of their record highs on Wednesday. The Nifty 50 climbed past the 26,150 mark with gains of over 300 points, while the Sensex jumped more than 950 points to an intraday high of around 85,570 - less than 600 points away from its all-time peak.

The combined market capitalisation of BSE-listed firms swelled to about Rs 473.65 lakh crore.As per an Economic Times report, behind this Rs 4 lakh crore rally is a combination of global and domestic triggers: rate-cut optimism, easing macro headwinds, returning foreign flows and a broad-based recovery in corporate earnings. Here are five key reasons driving the move.

Reason 1: Rate-cut hopes at home and abroad

The biggest sentiment booster is renewed conviction that the global rate-hike cycle is finally turning.

Markets are now betting heavily on a US Federal Reserve rate cut at its December policy meeting, the last one for 2025. Softer-than-expected US data has strengthened the belief that the Fed has room to ease, with CME FedWatch probabilities showing a large majority expecting a cut.On the domestic side, investors are also positioning for a more accommodative Reserve Bank of India. At its final Monetary Policy Committee (MPC) meeting of the year on December 3–5, the RBI is widely expected to deliver a 25 bps repo rate cut, helped by a series of downside surprises in CPI inflation.

Rate-sensitive pockets such as real estate, PSU banks and autos were among the notable gainers, each rising around 1% in Wednesday’s session.The Economic TimesTogether, the prospect of lower borrowing costs in both the US and India is feeding a classic “risk-on” trade in equities.

Reason 2: Strong global market cues

Indian markets are also riding a global wave of optimism. Asian equities advanced on Wednesday, tracking overnight gains on Wall Street.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose about 1%, while Japan’s Nikkei jumped 1.8%. US stock futures were modestly higher as well, extending a rebound that has already seen the S&P 500 and Nasdaq log three straight sessions of gains.The underlying driver is the same: weaker-than-forecast US retail sales and a drop in consumer confidence have reinforced the view that the Fed will need to act sooner rather than later to support growth.

That, in turn, is easing fears of a hard landing and reviving appetite for risk assets globally, giving Indian equities a strong external tailwind.

Reason 3: Declining crude oil prices ease macro worries

Oil is quietly doing a lot of heavy lifting for Indian equities. Crude prices are hovering just above $60 a barrel and sit near a one-month low, amid concerns that global supply could significantly outstrip demand next year.The Economic TimesFor a large oil importer like India, cheaper crude immediately improves the macro math: a lower import bill, reduced pressure on the current account, and potential relief on inflation as input costs ease for oil-intensive industries.

The article also notes a bold call from JP Morgan that Brent could even slide into the $30s by the end of FY27 if a supply glut deepens - a scenario that, if realised, would be a substantial medium-term positive for Indian markets.This backdrop is particularly supportive for sectors such as paints, chemicals, logistics and aviation, where fuel is a key cost component.

Reason 4: FIIs turning buyers again

A critical sentiment shift is visible in foreign institutional flows.

After months of choppy selling, foreign investors turned net buyers on November 25, purchasing equities worth about Rs785 crore.Strategists cited in the report argue that FII selling is likely to taper as the global “AI trade” cools off and India’s earnings outlook improves. With valuations having corrected meaningfully since September 2024 and India still offering one of the strongest structural growth stories in emerging markets, foreign investors are finding it harder to stay underweight.

If the Fed does deliver a cut and global risk appetite broadens, even a modest reversal of outflows into inflows can provide a powerful incremental boost to benchmark indices.

Reason 5: Earnings bottoming out and broad-based participation

Finally, the fundamentals are starting to line up. The Q2 earnings season showed clear signs that the downgrade cycle is bottoming out: the pace of cuts to profit estimates has slowed, and many brokerages are now pencilling in a return to double-digit earnings growth from FY27 onwards.The Economic TimesICRA expects India Inc to sustain momentum into Q3 FY2026, projecting 8–10% year-on-year revenue growth with operating margins improving by 50–100 bps, helped by softer input costs and gradually improving rural and urban demand.This improving earnings narrative is showing up in market breadth. Wednesday’s rally was broad-based: heavyweight index leaders like Reliance Industries and HDFC Bank have already logged solid year-to-date gains, while midcap and smallcap indices also rose over 1% each, rebounding after recent volatility.The Economic TimesPut together, rate-cut optimism, benign commodities, stabilising earnings and returning foreign flows have given bulls enough ammunition to push the Sensex and Nifty back toward record territory - and rekindled debate over whether a fresh leg of the bull market is underway.