The Indian stock market has been on a roll. For six consecutive trading sessions, benchmark indices like Nifty 50 and Sensex have stayed in the green- making this one of the most consistent rallies so far in FY25.

On Monday, the Nifty 50 opened at 23,515 and surged to an intraday high of 23,650, posting a gain of 1,253 points or 5.50% over six sessions. The BSE Sensex opened at 77,456 and hit 77,897, adding 4,069 points or 5.45% in the same period.

The rally wasn’t just limited to large caps. The BSE Small-cap index surged 9.60%, while the Mid-cap index rose 8.30%, comfortably outperforming the broader market.

So, what’s driving this rally? Let’s break it down.

Why is the Indian stock market rising?

1. Better-than-expected Q4 results in FY25

Corporate earnings have shown clear signs of recovery. India’s GDP, which had slowed to 5.4% in Q2 FY25, rebounded to 6.2% in Q3, increasing hopes for stronger Q4 results.

Fitch Ratings also expects a pickup in capital expenditure across FY26 and FY27, which adds to the market optimism.

Also read: What is the Market Capitalization to GDP Ratio? Explained

2. Expectations of an RBI rate cut

Post the US Fed’s dovish guidance last week, expectations are high that the RBI may cut rates in April 2025.

Morgan Stanley forecasts inflation to average 4% in FY26, enabling a 75 basis point cut, revised upward from their earlier 50 bps estimate.

Rate cuts typically boost liquidity — a strong trigger for bullish market moves.

You may also like: RBI Monetary Policy – 25 bps Rate Cut After 5 Years

3. Stocks are available at attractive valuations

Despite the rally, many quality stocks are still trading at fair valuations, prompting strong buying interest from both domestic institutional investors (DIIs) and foreign institutional investors (FIIs).

Investor type	Recent Activity	Value (cash segment)
DIIs	Net buyers	₹30,788.19 crore
FIIs	Turned buyers	₹5,819.12 crore

4. FIIs are back in buying mode

After months of consistent selling, FIIs have become net buyers in three of the last four sessions.

On March 21, they bought equities worth ₹7,470 crore, marking a major shift in sentiment.
Factors like a stable rupee, positive domestic macro trends, and fair valuations have pulled them back in.

You may also read: How Indian Monetary Policy Influences the Stock Market

5. Strong outlook for the Indian economy

Morgan Stanley projects that India will become the third-largest economy globally by 2028, moving from $3.5 trillion to $4.7 trillion by 2026.

This long-term growth story continues to fuel confidence among institutional and retail investors alike.

Technical indicators show further upside potential

The rally isn’t just about fundamentals — technical indicators back it up too.

• Nifty has broken out of a Falling Channel pattern
  
• RSI (Relative Strength Index) crosses 60, aligning with price breakout levels
  
• Moving averages (20DEMA, 50DEMA, 89DEMA) have been crossed positively
  

According to analysts, these signals indicate that 23,800 and 24,000 could be the next potential resistance levels.
Support zones are seen around 23,200 and 23,000, suggesting traders may use dips to enter.

Which sectors are leading this rally?

Two sectors have stood out:

• Banking: Kotak Mahindra Bank surged 4%, followed by gains in Axis Bank, ICICI Bank, SBI, and Bajaj Finserv.
  
• Energy: GAIL jumped 5%, Gujarat State Petronet added 2.5%, and Indraprastha Gas climbed 3%.

These moves were partly driven by proposed reforms in gas transmission tariff regulations.

Where is the market headed next?

Experts believe the rally may sustain but with some caution.
The next key trigger is April 2, when Trump’s reciprocal tariff announcements are expected.
This could cause a temporary pause or consolidation, but the broader sentiment remains bullish.

Nifty has already recovered over 6.3% in the last three weeks, largely due to value buying at lower levels and foreign capital inflows.

Final thoughts

The Indian stock market rally in FY25 is the result of multiple factors aligning — economic rebound, rate cut expectations, strong FII flows, and healthy valuations. But investors must remember: every rally comes with a responsibility to stay informed and rational. Use market dips wisely, watch global cues closely, and invest based on your goals — not the noise.