On October 1, 2025, the Indian stock market witnessed a rally, with both the Sensex and Nifty trading higher. Several key factors contributed to this positive momentum, influencing investor sentiment and market dynamics.
One of the primary drivers behind the market's rise was the Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) decision to maintain the repo rate unchanged at 5.5%. This decision signaled stability and provided reassurance to investors, particularly in rate-sensitive sectors such as banking, auto, and real estate, which experienced gains. The MPC's neutral stance further supported market sentiment.
In addition to maintaining the repo rate, the RBI also lowered its FY26 consumer price index (CPI) estimates to 2.6% and increased the GDP estimate to 6.5%. These revised projections indicated a positive outlook for the Indian economy, boosting investor confidence and encouraging participation in the stock market. The RBI's decision to increase the IPO financing limit to Rs 25 lakh per investor also contributed to the positive sentiment.
Sectoral performance played a significant role in the market's upward movement. Banking, pharma, media, and private lenders showed strength, contributing to the overall positive momentum. Specific stocks, such as Sun Pharmaceutical Industries Ltd, Tata Motors, Trent, Kotak Mahindra Bank, and ICICI Bank, emerged as top gainers, further fueling the rally. Conversely, metals and public sector banks faced pressure, indicating mixed performance across different sectors.
Global cues also influenced the Indian stock market. While Asian indices opened lower, US stock markets finished the previous session higher, which provided a slightly positive backdrop. However, concerns about a potential government shutdown in the US and its impact on economic data and Federal Reserve rate decisions added a layer of uncertainty.
Furthermore, technical analysis of the Sensex indicated a potential for further rise, contingent on sustaining support at the 79500 zone and crossing the 50EMA at 81400. This technical outlook, combined with strong rollovers from the previous series, suggested continued bullish sentiment and high participation in the market.
However, it's important to note that Foreign Institutional Investors (FIIs) have retreated to a bearish stance. This divergence between retail investor confidence and institutional pessimism presents a paradox, suggesting that the market's direction could be subject to high-velocity moves in the near future.
In summary, the rise in the stock market on October 1, 2025, can be attributed to a combination of factors, including the RBI's stable monetary policy, positive economic projections, sectoral gains, and technical indicators. However, investors should remain cautious due to global uncertainties and the divergence in opinion between retail and institutional investors.
