Here are 6 major reasons that have induced a sharp surge on the bourses today.
RBI policy
Investors cheered the pro-market initiatives of the Reserve Bank of India during its monetary policy meeting earlier today, even as the central bank unanimously decided to keep the repo rates unchanged at 5.50%. RBI Governor Sanjay Malhotra said growth-inflation dynamics have shifted since the August policy, with the rationalisation of GST expected to have a cooling effect on price pressures. The overall inflation outlook has turned more benign, helped by a sharp fall in food prices. Consequently, the central bank has revised its average headline inflation forecast for FY26 downward to 2.6% from 3.1% earlier, while also trimming the estimate for the fourth quarter.
Bank stocks gain
HDFC Bank, Kotak Mahindra Bank, ICICI Bank, and Axis Bank led the surge and helped the Nifty Bank index gain over 1%. To improve the flow of credit, the RBI raised the ceiling for taking loan against shares from the existing Rs 20 lakh to Rs 1 crore. It has also increased IPO financing limit to Rs 25 lakh, as part of a series of 5 measures announced by RBI to improve the flow of credit in the economy following a 100 basis point rate cut so far in the calendar year 2025. This is seen as a major boost for the banking sector, potentially shifting deal financing away from private credit and into the formal banking system.
Oversold conditions
The markets slipped for 8 straight days before today’s surge. To be sure, the Nifty slipped over 3% or about 800 points during the period. The 30-share Sensex also shed over 2,300 points or 3.8%. A buy on dips strategy followed by RBI’s robust commentary could be at play.
Rupee recovers
After opening flat, the Indian rupee gained 5 paise to 88.75 against the US dollar, to help bolster momentum in domestic equities. The dollar hovered near a one-week low versus major peers on Wednesday as the U.S. government headed towards a likely shutdown which would delay the release of crucial jobs data.
Crude impact
Oil prices, meanwhile, stayed under pressure on expectations of an OPEC+ production hike and the resumption of exports from Iraq’s Kurdistan region. Brent crude fell 1.3% to $67.10 a barrel, while U.S. West Texas Intermediate dropped 1.5% to $62.51.
Positive global cues
US stocks closed higher on Tuesday as investors looked past concerns of a possible U.S. government shutdown, with Wall Street capping an unusually strong September. The S&P 500 rose 0.41% to 6,688.46, while the Nasdaq Composite added 0.31% to 22,660.01. The Dow Jones Industrial Average advanced 81.82 points, or 0.18%, to end at 46,397.89 — marking a new record close.
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