The Indian stock market experienced a significant surge on Friday, December 19, 2025, with the Sensex jumping nearly 600 points. This rally reversed a four-day losing streak, bringing substantial gains to investors. The surge was fueled by a combination of factors, including encouraging U.S. inflation data, positive global cues, and renewed foreign investment.
Market Overview
The Sensex climbed to an intraday high of 85,067, while the Nifty 50 reclaimed the 25,979 level. The gains were broad-based, with the BSE Midcap and Smallcap indices also rising by over half a percent. The overall market capitalization of BSE-listed firms increased from ₹466 lakh crore to nearly ₹469 lakh crore, resulting in investors earning over ₹3 lakh crore in a single session. At approximately 9:45 am, the S&P BSE Sensex jumped 525.11 points to reach 85,006.92, while the NSE Nifty50 climbed 147.50 points to 25,963.30.
Key Factors Driving the Rally
- Cooling US Inflation: Softer-than-expected inflation data from the United States played a crucial role in boosting investor confidence. The November core inflation rate in the US came in at 2.6%, below the estimated 3%. This eased concerns about aggressive interest rate hikes by the US Federal Reserve, increasing risk appetite in global markets.
- Global Cues: Asian markets mirrored the positive trend, further supporting the Indian stock market. Wall Street also closed higher following the release of the encouraging inflation report, which strengthened hopes for interest rate cuts in the coming year.
- Bank of Japan's Policy Shift: The Bank of Japan (BOJ) raised interest rates to 0.75%, the highest level in nearly three decades. This move signals a shift away from years of ultra-low borrowing costs.
- Rupee Strength: The Indian rupee strengthened in early trade, appreciating 24 paise to 89.96 against the U.S. dollar. This appreciation was supported by corporate dollar inflows and softer crude oil prices.
- Foreign Fund Inflows: Foreign investors, who had been selling for eight consecutive sessions, turned into net buyers on Wednesday, purchasing shares worth INR 11.72 billion (USD 129.7 million). This renewed interest from foreign investors further boosted market sentiment.
Market Sentiment and Expert Opinions
The positive global setup helped Indian markets rebound after several sessions of consolidation. Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, noted that cooling inflation in the US is imparting resilience to the US economy and markets, which is positive for equities worldwide as 2025 comes to a close.
Cautious Note
Despite the positive momentum, experts advise caution. The Bank of Japan's interest rate hike has raised concerns about the unwinding of yen-funded bets on riskier assets like Indian stocks.
In conclusion, the Indian stock market witnessed a significant rally driven by encouraging U.S. inflation data, positive global cues, and renewed foreign investment. While the market sentiment is largely positive, investors should remain cautious and consult with financial advisors before making investment decisions.
