Stock Market Today: Sensex at Rs. 84,000, Nifty 50 Near 25,800

Stock Market Today: Sensex at Rs. 84,000, Nifty 50 Near 25,800

The Indian stock market has delivered a strong performance in October 2025, with major indices gaining meaningful ground. The benchmark index BSE Sensex surged by about 4,159 points during the Diwali month, reflecting roughly a 5 % increase. According to recent data, the Sensex now stands just about 1,552 points below its all-time high of 85,978. Meanwhile, the Nifty 50 has moved closer to its record highs, trailing by only around 410 points.

This rally marks a turnaround following a period of subdued performance and signals renewed investor interest and improved sentiment in Indian equities.

Drivers of the Replay

A key driver of this rebound has been the return of foreign institutional investors (FIIs) into Indian equities. After several months of net selling, these investors flipped to net buying in October, contributing more than Rs. 7,300 crore into Indian stock markets during the month. This return of foreign capital has helped broaden market participation and provided support to large-cap stocks.

The macroeconomic backdrop also remains supportive. The Reserve Bank of India kept its policy repo rate unchanged at 5.50 % and revised its inflation and growth projections, lowering inflation expectations and upgrading growth estimates. These signals suggest a potential easing bias, which is positive for risk assets. Corporate earnings in several sectors have begun to strengthen. Large companies in energy, retail, and new-age businesses have posted better-than-expected results, anchoring investor optimism.

At the same time, domestic institutional investors (DIIs) continue to play a stabilising role, with large flows into equities in 2025, suggesting that even as foreign flows were weak, domestic support has helped sustain the market. For instance, DIIs have invested about Rs. 6 trillion so far this year, the highest such annual investment on record.

Rotation in sectoral performance has also become evident; sectors sensitive to the economic cycles have outperformed, reflecting investor preference for recovery-oriented stocks rather than purely defensive ones.

Flow Patterns and Liquidity Focus

Detailed data on investor flows show that foreign portfolios have been volatile. For instance, for the week ended 10 October 2025, equity net inflows from foreign investors were around Rs. 60.8 billion, of which about Rs. 48.7 billion went into primary market equity and Rs. 12 billion into secondary market equity. In contrast, preceding weeks had seen net outflows. This swing suggests a change in foreign investor mood, albeit fragile.

On the domestic side, even as the broader market was under pressure earlier in the year, DIIs have maintained substantial net investment in equities. The historic high level of DII flows in 2025 has offset much of the overseas sell-off. This dual flow pattern highlights that market momentum is increasingly dependent on domestic investor participation rather than being solely driven by foreign flows.

Potential Risks and What to Watch

Despite the strong rally, several risks remain. One major risk is the sustainability of earnings momentum: while results have improved, broad-based profit recovery across many sectors remains crucial for the rally to continue. Any disappointment in corporate profits could dampen sentiment.

Global risk factors could impact foreign investor sentiment and thereby affect market liquidity and flows. Inflation in India remains a key area to monitor; although the RBI has projected a moderate path, any surprise uptick in inflation could delay rate cuts and weigh on equities. Additionally, with indices closer to their record highs, upside becomes more challenging, and the market may face consolidation or pullback if fresh positive catalysts do not emerge.

Near-Term Outlook

With normal trading resuming after the Diwali holiday, the market is entering a phase where earnings updates, investor flows, and macro data will shape direction. The next batch of large-cap corporate results will provide cues on whether the recovery is broadening. Meanwhile, tracking daily and weekly flow data from FIIs and DIIs will be useful in gauging whether the recent return of foreign capital is sustainable or a short-lived recovery.

The near-term narrative is one of cautious optimism. The market has the tailwind of supportive policy and improving sentiment, but it also faces higher risk if global or domestic surprises turn negative. A constructive scenario would involve continued earnings growth, steady domestic flows, and a gradual recovery in foreign participation. A less favourable outcome might see consolidation or sideways movement if any of these elements falter.

Final Word

The Indian stock market has made a notable rebound in October 2025, backed by strong domestic investor participation, a resurgence of foreign capital, and improved macro signals. While the near-term backdrop remains positive, sustaining this momentum will require continued improvement in corporate earnings and stable global conditions. With valuations already rich and indices approaching record levels, attention will shift to whether the market can transition from a sentiment-driven bounce into a durable upward trend.