Sensex gains 485 points, Nifty 50 ends above 25,700; what drove the Indian stock market higher? 5 key factors explained

Stock market today: Extending gains to a third consecutive session, Indian stock market benchmarks —the Sensex and the Nifty 50 —clocked healthy gains on Friday, October 17, hitting their 52-week highs during the session, despite weak global cues.

The Sensex hit its 52-week high of 84,172, while the Nifty 50 also rose to the 52-week high of 25,781.50 during the session.

However, the indices pared gains later. Finally, the Sensex ended 485 points, or 0.58 per cent, up at 83,952.19, while the Nifty 50 ended at 25,709.85, up 125 points, or 0.49 per cent.

The mid and small-cap segments underperformed. The BSE Midcap and Smallcap indices ended with losses of 0.43 per cent and 0.49 per cent, respectively.

In these three sessions, the Sensex has risen by over 1,900 points, or 2.3 per cent, while the Nifty 50, too, has jumped 2.2 per cent.

The Sensex and the Nifty 50 are now 2 per cent down from their all-time highs of 85,978.25 and 26,277.35, respectively, which they hit on September 27 last year.

What drove the Indian stock market higher?

Let’s take a look at five factors that drove the Indian stock market higher:

1. Short covering in select heavyweights

Experts say investors appear to be covering their shorts in select heavyweights, including ICICI Bank, Reliance Industries, Bharti Airtel, and HDFC Bank, which kept the benchmarks up.

Meanwhile, following the recent correction, the valuation of the Nifty 50 has become rational, triggering buying interest in select large caps.

“The market is resilient and technically strong. Price action in the leading stocks indicates short covering. Even now, there are big shorts in the system, and the strength in the market might keep the bears on the back foot, facilitating further short covering,” VK Vijayakumar, Chief Investment Strategist, Geojit Investments, observed.

2. In-line Q2 results

So far, the numbers for the September quarter have been in line with expectations. There have been no negative surprises. While it is too early to say that Q2 earnings will remain stable, as major banking names have yet to announce their Q2 results, it is worth noting that the trend has been stable.

Reliance will report its Q2 results on Friday. The heavyweight is expected to report healthy double-digit growth in margin on a year-over-year basis.

Experts expect healthy earnings from Q3. So, the market may be discounting that the worst for earnings is behind.

According to brokerage firm Motilal Oswal Financial Services, FY26 will mark the crossover from subdued low-single-digit earnings growth to more sustainable double-digit earnings growth.

“Nifty earnings growth is expected at a healthy 8 per cent and 16 per cent year-on-year (YoY) in FY26 and FY27, respectively, as compared to 1 per cent in FY25,” Motilal Oswal said.

3. FIIs nibble at Indian stocks again

Foreign institutional investors (FIIs) have started buying Indian stocks moderately. In the previous session, they bought Indian stocks worth ₹997.29 crore in the cash segment. Last week, foreign investors purchased Indian stocks worth nearly ₹3,000 crore in the cash segment, the first positive figure after several weeks.

4. Dollar’s weakness

The dollar index is at its two-week low, which appears to have triggered some foreign capital inflows into emerging markets, such as India. The dollar index has been in the red for four consecutive sessions and appears poised to close the week in the red.

5. India’s healthy macro outlook

While the Indian stock market has remained muted over the last year, experts believe that the country’s favourable growth-inflation dynamics, policy measures such as income tax relief and GST cuts, a healthy monsoon, and the RBI’s monetary easing are expected to augur well for the coming year.

Experts say investors are buying quality stocks available at reasonable valuations for the long term, which is supporting the market.

The International Monetary Fund (IMF) has raised India’s growth forecast by 0.2 percentage points to 6.6 per cent for the fiscal year 2026.

According to brokerage firm Axis Securities, Samvat 2082 is poised to be an eventful and closely watched year for the Indian economy.

“Despite prevailing external headwinds, India’s domestic growth momentum remains resilient. Key macroeconomic indicators point toward a stronger performance in FY26 compared to FY25, with early projections suggesting an even more robust outlook for FY27,” said Axis Securities.

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Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.