The Indian stock market is experiencing a Diwali rally on October 20, 2025, with both the Sensex and Nifty showing substantial gains. The Nifty50 soared past 25,900, while the BSE Sensex was up over 600 points in early trade. As of 11:00 AM, the BSE Sensex was trading at 84,525, up 573 points or 0.68 percent, and the Nifty 50 was up 169 points or 0.66 percent, trading at 25,879. Several factors are contributing to this surge, creating a positive sentiment in the market.
One of the primary drivers is strong buying activity by Domestic Institutional Investors (DIIs). DIIs have been consistently injecting funds into the market, providing significant support. On the previous trading day, DIIs were net buyers with ₹1,526.61 crore. Marginal buying by Foreign Institutional Investors (FIIs) is also adding to the momentum. On the same day, FIIs purchased shares worth ₹308.98 crore net. This combined institutional buying is fueling the rally.
Positive news regarding festival season sales is further boosting market sentiment. Reports of brisk sales in automobiles and white goods indicate strong consumer demand, which is positively impacting related sectors. Expectations of continued positive news flow related to the festive season are also contributing to the optimistic outlook.
Furthermore, positive global cues are playing a role. Asian markets are displaying strength, with the Nikkei 225 and Hang Seng indices showing significant gains. US markets also ended the previous session in positive territory, setting a favorable tone for the Indian market. Easing trade tensions are also helping to improve market sentiment.
Corporate earnings are another critical factor influencing the market. Reliance Industries (RIL) is a top gainer among Sensex constituents, trading higher by over 3%. This surge comes after RIL reported a 9.6% year-on-year rise in net profit for the September quarter, driven by strong performance in its consumer-facing retail and telecom businesses, as well as a recovery in its core oil-to-chemicals segment. HDFC Bank is also trading higher after reporting a jump in consolidated net profit. These strong corporate results are instilling confidence in investors.
Market experts suggest that the current momentum is likely to continue. According to Bajaj Broking, the Indian benchmark indices ended the previous session strongly, supported by short covering from FII participants and a steady inflow of funds. The brokerage firm expects the Nifty to head towards 25,900 and then 26,200 levels in the coming weeks, viewing any dips as buying opportunities. Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, noted that the bullish pattern in Nifty 50 remains intact, with the next upside target around 26,200.
However, analysts also advise caution, particularly regarding smallcaps. Abhinav Tiwari, Research Analyst at Bonanza, suggests closely monitoring upcoming Q2 earnings reports and developments in US-India trade discussions, while acknowledging that global market uncertainty and challenges from IT earnings may lead to increased volatility. Vinod Nair, Head of Research at Geojit Investments, noted that investors are likely to maintain a preference for high-quality names across consumption, banking, and real estate.
In summary, the Diwali rally on October 20, 2025, is driven by a combination of strong domestic institutional buying, positive global cues, encouraging festival sales data, and robust corporate earnings. While the outlook remains optimistic, investors are advised to stay vigilant and focus on quality stocks amid potential volatility. The Muhurat trading session scheduled for October 21 is expected to add further to the festive market spirit.
