Five-Day Winning Streak: Nifty and Sensex Post Best Week in Four Years – What's Driving the Surge?

Indian Markets Celebrate a Stellar Week

Indian stock markets extended their winning run to five consecutive days on March 21st, capping off a phenomenal week. Both the Sensex and Nifty 50 notched up gains of over 4 percent for the week – their best weekly performance in four years. The Nifty 50 even briefly touched 23,400, a level not seen in two months. After a period of volatility, it seems the bulls are firmly back in control, but what's behind this sudden surge?

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FIIs Change Their Tune, Rupee Strengthens

A major factor driving the rally is a shift in behaviour from Foreign Institutional Investors (FIIs). After a month of consistent selling, FIIs have turned net buyers in two of the last three sessions. FIIs are not only buying in the cash market but also significantly reducing their short positions (bets against the market) and increasing their long positions (bets on the market) in the futures market. This change in sentiment has boosted confidence among domestic investors. A strengthening rupee, which gained for the eighth straight session, also provided support.

Broader Markets Outperform, Large-Caps Look Attractive

While the headline indices did well, it was the broader market that really shone. The Nifty Smallcap 100 and Nifty Midcap 100 indices surged, reflecting strong retail investor participation. The midcap index, in particular, posted an impressive 8 percent gain over the five-day period. 

Sectoral Winners and a Tech Setback

Most sectors participated in the rally, with Realty leading the charge, gaining over 2 percent. Energy, Banks, Auto, Infra, Pharma, Media, and PSU Banks also posted solid gains, ranging from 1-2 percent. However, IT stocks faced pressure after Accenture, a major global IT firm, issued lower-than-expected revenue guidance. Because Indian IT companies heavily rely on exports, Accenture's outlook is seen as a key indicator for the sector's global prospects, and the news caused some jitters.

Stock Specifics

Bajaj Finance shares hit a record high after news that Managing Director Rajeev Jain would take on a broader executive role at Bajaj Finserv, the parent company.

Top Nifty 50 gainers included SBI Life Insurance, NTPC, ONGC, Bajaj Finance, and BPCL, all rising around 3%. Conversely, Trent, M&M, Wipro, Hindalco, and Infosys were among the biggest losers.

This past week has been a strong signal for the bulls. Changing sentiments among FII, coupled with broader market outperformance and reasonable large cap valuations, have all played their parts.