On August 18, 2025, the Indian stock market witnessed a significant surge, with the Sensex soaring over 1,000 points, leading to an increase of ₹5 lakh crore in investor wealth within a mere five minutes of trading. This impressive rally was fueled by a combination of positive global and domestic factors that boosted market sentiment and risk appetite.
Several key factors contributed to this upswing. Optimism surrounding the Russia-Ukraine situation played a significant role. Expectations of potential de-escalation in the conflict raised hopes for relief in commodity markets and a reduction in worldwide inflationary pressures. Furthermore, indications from U.S. President Donald Trump that he might reconsider secondary tariffs on India also buoyed investor confidence.
The Indian market also reacted positively to S&P's upgrade of India's credit rating. Such upgrades typically signal confidence in a country's economic stability and growth prospects, attracting more investment.
Besides these global cues, proposed goods and services tax (GST) reforms in New Delhi added to the positive momentum. The domestic market experienced broad-based buying, with the BSE Midcap and Smallcap indices each rising by over 1%. Around 9:30 AM, the Sensex was up 1.34% at 81,682, while the Nifty 50 was up 1.43% at 24,983.
The rally was also supported by strong domestic fund inflows. Net inflows into equity mutual fund schemes experienced a substantial jump in July, and contributions through systematic investment plans (SIPs) also reached record highs. This demonstrates increasing confidence among domestic investors in the Indian stock market.
Foreign portfolio investors (FPIs) have also been buying Indian equities, further boosting market sentiment. This buying trend is occurring amidst growing concerns about a potential US economic slowdown, which has negatively impacted the US dollar, stocks, and bonds.
Gains in shares of major companies, including Reliance Industries and banking players like ICICI Bank, HDFC Bank, and Axis Bank, further propelled the market benchmarks higher. The banking sector, in particular, has been performing well, driven by better-than-expected Q4 earnings.
Easing trade war jitters between the US and China also contributed to the positive sentiment. Reports of active negotiations between the two countries to reach a favorable trade deal have reduced anxiety related to tariffs.
While the Indian stock market is currently experiencing an exciting rally, investors should remain cautious and avoid being swept up by euphoria. Global volatility could still impact future performance.
