Nifty Explodes 8% In Biggest Weekly Surge Since 2021, Is Dalal Street Heading For A Mega Bull Run Or A Brutal Trap?

Mumbai: Dalal Street witnessed a spectacular Diwali rally as the Nifty surged 8 percent this week, its strongest weekly performance since January 2021. Renewed foreign buying, robust corporate earnings and attractive valuations powered the rebound, even as global technology stocks suffered heavy losses.

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The rally added nearly Rs 20 lakh crore to investors wealth, lifting the combined market capitalisation of BSE-listed companies to Rs 502 lakh crore.

Global Turmoil

Indian equities defied a worldwide technology sell-off triggered by concerns over artificial intelligence investments and tighter US regulations.

The Nasdaq plunged 5.52 percent, while Japan's Nikkei initially tumbled 7 percent. South Korean and Taiwanese benchmarks also suffered sharp losses as investors reduced exposure to AI-linked stocks.

India emerged as a relative beneficiary of this global portfolio rotation.

Foreign Money

Foreign institutional investors purchased nearly Rs 15,000 crore of Indian equities on Thursday, their biggest single-day buying in over a year.

FIIs invested Rs 35,781 crore across five trading sessions.

Large-cap stocks attracted substantial inflows, particularly financials, technology and automobiles, while smaller companies lagged.

Earnings Support

Corporate earnings strengthened the recovery narrative.

Kotak Institutional Equities reported that Nifty 50 companies declaring results registered 19 percent year-on-year profit growth, exceeding estimates by 4 percent.

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Across its broader coverage universe, profits climbed 18 percent, beating forecasts by 3 percent.

Nomura highlighted improving foreign flows, moderating valuations and resilient earnings as key market tailwinds.

Bull Trap?

Despite the spectacular advance, analysts remain watchful.

The rally's sustainability hinges on continued FII inflows, earnings upgrades and stability in global markets.

Domestic institutional selling and geopolitical uncertainties could still interrupt momentum.

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Valuations across several sectors remain below post-pandemic averages, potentially offering further upside.

For investors, the crucial question is whether foreign capital will sustain its renewed appetite or retreat once global volatility subsides.

The bulls have returned emphatically, but the next few trading sessions will determine whether this is a durable breakout or merely a fleeting Diwali windfall.

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