Sensex jumps 6,269 points in 7 days; what is driving the Indian stock market higher? EXPLAINED with 5 key factors

Indian stock market benchmarks ended higher for the seventh consecutive session on Wednesday, April 23, buoyed by stable Q4 earnings, significant foreign capital inflow and healthy growth outlook..

The Sensex opened at 80,142 against its previous close of 79,596 and rose 659 points, or 0.80 per cent, to the level of 80,254.55 during the session on Wednesday. On the other hand, the Nifty 50 started the day at 24,358 against its previous close of 24,167 and climbed 192 points, or 0.80 per cent, to 24,359.

The domestic market, however, pared gains on some profit booking due to overbought conditions.

Finally, the Sensex closed 521 points, or 0.65 per cent, higher at 80,116.49, while the Nifty 50 settled 162 points, or 0.67 per cent, up at 24,328.95.

The market witnessed an across-the-board buying as the BSE Midcap and Smallcap indices rose 0.94 per cent and 0.26 per cent, respectively.

In these seven days, the Sensex has gained 6,269 points, or 8.5 per cent, and the Nifty 50 has jumped 1,930 points, or 8.6 per cent. Due to the seven-session winning streak, investors have become richer by about ₹36 lakh crore.

What is driving the Indian stock market higher?

There are five key factors behind the current rally in the Indian stock market. Let's take a look:

1. Tariff concerns subside

While uncertainty persists about the economic impact of a trade war triggered by US President Donald Trump's tariff policies, the 90-day pause on reciprocal tariffs and the US administration's negotiations with trade partners have eased concerns over a trade war.

According to CNBC, "Treasury Secretary Scott Bessent said at a private investor summit in Washington, D.C., hosted by JPMorgan Chase, that he expects there will be a de-escalation in trade war with China in the very near future."

Meanwhile, concerns over rising tensions between Trump and US Federal Reserve Chair Jerome Powell are also easing.

According to Reuters, Trump told reporters in the Oval Office on Tuesday that he had no intention of firing Fed Chair Jerome Powell.

"President Trump’s message that he has no intention of firing the Fed chief has calmed the US markets. Trump’s remarks on Chinese tariffs indicate that he might reduce the US-China tensions," VK Vijayakumar, Chief Investment Strategist at Geojit Investments, observed.

2. Bright outlook of the Indian economy

Experts say the Indian economy remains on a solid footing, and Trump's tariffs are unlikely to affect it significantly, given India's relatively low exports to the US. In fact, some of them highlight that a fall in crude oil prices, metals, and other commodities due to a trade war could actually bode well for the Indian economy and companies, thanks to reduced input costs and a decline in inflation.

Even though a global trade war may impact the Indian economy, it may remain one of the fastest growing large economies of the world, with GDP growth expected to remain above 6 per cent in FY26.

The International Monetary Fund (IMF) slightly cut India’s growth forecast for the current fiscal year to 6.2 per cent from 6.5 per cent, predicted last October.

The IMF said India's growth outlook is relatively more stable at 6.2 per cent in 2025 (2025–26), supported by private consumption, particularly in rural areas, but this rate is 0.3 percentage points lower than that in the January 2025 World Economic Outlook update on account of higher levels of trade tensions and global uncertainty.

In FY27, the IMF expects India to grow at 6.3 per cent.

3. Stable Q4 earnings

The March quarter (Q4FY25) results so far have not thrown up any negative surprises. While the IT sector’s numbers have been mixed and management commentary remains cautious, the banking sector has reported relatively strong results. This has boosted market sentiment and raised hopes that earnings growth will improve from here on, supporting current market valuations.

Experts pointed out that improved asset quality and healthy credit growth have driven better results from banking stocks, attracting strong investor interest. Meanwhile, a contrarian bet on IT, driven by attractive valuations and expectations of a pickup in spending in the second half of FY26, keeps the sector active.

4. Forecast of a healthy monsoon

The forecast of an above-normal monsoon is a significant boost to domestic market sentiment. The India Meteorological Department (IMD) has forecasted above-normal rains during the coming monsoon season in the country.

"The southwest monsoon seasonal rainfall over the country as a whole during 2025 is most likely to be above normal (more than 104 per cent of the long period average (LPA)). The seasonal rainfall over the country as a whole is likely to be 105 per cent of LPA with a model error of ± 5 per cent," IMD director general Mrutyunjay Mahapatra said. The LPA of the season rainfall over the country for 1971-2020 was 87 cm.

A healthy monsoon could lead to higher agricultural output, which will ease food inflation and set the stage for the Reserve Bank of India to reduce interest rates.

The monsoon is crucial for India's agriculture sector, which supports the livelihood of about 42 per cent of the population and contributes about 18 per cent to the country’s economy. A good monsoon will accelerate the revival in rural consumption.

5. Foreign capital inflow

Foreign portfolio investors (FPIs) have been buying Indian equities in the cash segment for five consecutive sessions. Cumulatively, they have invested about ₹18,000 crore in Indian equities in the cash segment.

The decline in dollar index, US bonds and bright outlook of the Indian economy have been the key reasons behind the return of foreign investors to the Indian market.

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