The Indian stock market witnessed a robust rally on August 18, 2025, with both the Sensex and Nifty surging significantly. The Sensex soared by over 1000 points, while the Nifty 50 also experienced a substantial jump. This surge added nearly ₹5 lakh crore to investor wealth within minutes of the market opening. Several key factors contributed to this positive market sentiment, spanning both global and domestic influences.
Easing Global Headwinds: Optimism surrounding a potential de-escalation in the Russia-Ukraine conflict played a significant role. Analysts suggest that any signs of peace talks or easing tensions between the two countries could provide relief to commodity markets and alleviate inflationary pressures worldwide. Moreover, a meeting between the U.S. and Russian presidents contributed to receding anxieties regarding Russian oil supplies, further boosting market confidence.
Potential Shift in U.S. Trade Policy: Speculation about potential shifts in U.S. trade policy also influenced the market positively. While specific details of these potential shifts were not elaborated upon, the anticipation of changes likely contributed to the upbeat mood.
Upgrade in India's Credit Rating: S&P Global Ratings upgraded India's long-term sovereign credit rating to 'BBB' from 'BBB-'. This upgrade, the first in 18 years, reflects strong economic growth, improved monetary policy credibility, and sustained fiscal consolidation. The upgrade boosted financial stocks, with HDFC Bank and State Bank of India among the gainers.
GST Reforms: Optimism surrounding the Indian government's proposed Goods and Services Tax (GST) reforms significantly boosted market sentiment. The government has proposed lowering the GST on small petrol and diesel cars to 18% from 28%. Furthermore, the market anticipates potential GST cuts, particularly in consumption-linked sectors, following Prime Minister Narendra Modi's announcements. However, proposed increase of sin tax under GST 2.0 revamp led to fall in alcohol, tobacco, and gaming stocks. On the other hand, insurance stocks surged in response to the government considering GST cut on health and term insurance premiums.
Sectoral Performance: Auto stocks led the rally, jumping 4%, reaching their highest level in 10 months. Hero MotoCorp and Maruti Suzuki were among the top gainers in the auto sector. Consumer discretionary and consumer durables stocks also propelled the market's rise. The Nifty FMCG index was up 1.6%, with Dabur, Hindustan Unilever, and Nestle India topping the charts. Financial stocks also advanced, buoyed by the S&P ratings upgrade on lenders.
Expert Opinions: Shrikant Chouhan, Head of Equity Research at Kotak Securities, noted that the market is likely to open around 24,800–24,950, which is considered a resistance zone. He suggested that 24,450 would act as a key support zone for short-term traders and that bullish sentiment is likely to continue as long as the market trades above this level. Anand James, Chief Market Strategist at Geojit Investments, pointed out that a significant percentage of mid-cap and small-cap constituents closed above their 10-day simple moving averages, signaling positive momentum in those segments.
Global Cues: Asian markets traded in a mixed manner. Japan's Nikkei rose, supported by expectations of easier global monetary conditions. Investors are also anticipating the Federal Reserve's Jackson Hole symposium, where Chair Jerome Powell is expected to outline the economic outlook and policy path.
