Sensex jumps 965 pts, Nifty ends above 24,334; financials lead rally

Markets close sharply higher

Indian equity benchmarks ended Thursday's session with strong gains, with the Sensex jumping 965 points and the Nifty closing above the 24,334 mark. The rally was broad-based, but financial stocks stole the show, powering the indices higher as investors positioned themselves ahead of a slew of key corporate earnings.

The 30-share Sensex settled at 79,705, while the 50-stock Nifty finished at 24,334. Market breadth remained positive, with advances outpacing declines on both the BSE and NSE.

Financials lead the charge

Banking and financial services stocks were the standout performers, with major lenders and non-banking financial companies recording sharp gains. The Nifty Bank index surged over 2 per cent, buoyed by expectations of robust quarterly results from leading private sector banks.

Analysts attributed the rally to a combination of factors, including strong domestic macroeconomic data and easing global concerns. "Investors are betting on a strong earnings season, especially for financials, which have been under-owned for a while," said a market strategist.

The rally in financials also lifted sentiment across other sectors, with IT, auto, and FMCG stocks joining the upswing. However, midcap and smallcap indices underperformed the benchmarks, suggesting some profit-taking in broader markets.

What drove the surge

The sharp upmove came amid expectations of continued foreign institutional inflows, following recent dovish signals from the US Federal Reserve. A weaker dollar and softening US bond yields have made emerging markets more attractive to global investors.

Domestically, the government's focus on infrastructure spending and a healthy monsoon have bolstered confidence in the economy. "The market is pricing in a strong earnings rebound, and today's move reflects that optimism," added another analyst.

Meanwhile, volatility index India VIX cooled off, indicating reduced fear among traders. The rupee also strengthened slightly against the US dollar, providing additional support to the equity markets.

Looking ahead

With the earnings season in full swing, market participants will closely watch results from index heavyweights due later this week. Any positive surprises could extend the rally, while disappointments may trigger profit-booking at higher levels.

Global cues, particularly US inflation data and the Fed's policy stance, will also influence sentiment in the coming sessions. Traders are advised to stay selective and focus on stocks with strong fundamentals.