Sensex Crosses 86000 Mark For First Time, Nifty Hits Fresh Record High: Key Factors Behind Rally

Sensex crossed the 86,000-mark for the first time in history on November 27, and Nifty 50 also hit a fresh record high above 26,300. The benchmark indices extended their upward movement from the previous day’s gains, where both Sensex and Nifty gained over 1.20 per cent each.  

The fresh highs come more than a year after the indices had earlier set records on September 27, 2024.

Banks and financial services stocks led the Sensex past the 86,000-mark. Nifty Financial Services index was up nearly 0.60 per cent, and Nifty Bank traded higher by more than 0.30 per cent.

Bajaj Finance surged as much as 3.18 per cent in early trade, while Bajaj Finserv gained up to 1.57 per cent, emerging as the top gainers in the 30-share benchmark. FMCG giant Hindustan Unilever, engineering mammoth Larsen & Toubro, private sector lenders HDFC Bank and ICICI Bank also gained more than a per cent.

Why Stock Market Is Up Today

The rally came on the heels of an expected rate cut by the US Federal Reserve at its Federal Open Market Committee’s (FOMC) meeting on December 9-10. According to CME’s FedWatch Tool, market participants expect an 83.40 per cent chance that the Fed will cut rate next month, significantly higher than the 44.40 per cent chance seen last week.

Historically, cuts in US interest rates have had a positive impact on the Indian stock market. Lower US rates tend to make US assets less attractive, prompting foreign investors to seek higher returns in emerging markets like India. This often leads to increased foreign portfolio inflows.

Further, hopes of a Russia-Ukraine peace deal and falling crude oil prices supported the rally.

Brent crude oil futures traded 0.43 per cent lower at $62.27 per barrel, and the West Texas Intermediate (WTI), too, traded 0.43 per cent lower at $58.40 per barrel.

“Domestically, robust gross domestic product (GDP) projections, strong Goods and Services Tax (GST) collections, and sustained domestic inflows have reinforced confidence in India’s economic outlook,” said Ajit Mishra, senior vice president, research, Religare Broking.

Beyond the short-term triggers, long-term factors such as income tax relief, GST rate rationalisation, and stronger-than-expected quarterly earnings are also in play.

What Should Investors Do

Ankit Patel, Co-founder and Partner at Arunasset Investment Services, said the economy is shifting “from a disinflation phase into a clear reflation turn,” noting that inflation is now “too soft for an economy that wants to grow fast.” He pointed out that if gold were excluded, October CPI would have turned negative, highlighting the need for stronger nominal growth. While nominal GDP is currently expanding in high single digits, Patel said India should be aiming for “closer to 11–12 per cent” to support investments, wages and corporate profitability, a gap that, he added, makes reflation “the dominant theme for the next year.”

He said policy is already moving in that direction, backed by lower rates, easier liquidity and firm credit growth, a mix that typically supports a multi-quarter earnings cycle. For investors, Patel advised staying invested and using market dips to add exposure, with an overweight stance on banks, credit-linked cyclicals and consumption-focused stocks.

Mishra cautioned that even though the market’s “broader trend remains firmly positive,” investors should stay disciplined and avoid chasing stocks at stretched valuations. He advised focusing on high-quality largecaps and using declines to add positions, while keeping portfolios balanced across sectors.

For short-term traders, Mishra said it’s important to “trail stop-losses to protect gains,” given the likelihood of bouts of volatility at record levels. Long-term investors, he noted, can continue systematic investment plans (SIPs) and look for opportunities in banks, autos, select metals and IT, segments backed by steady earnings visibility and strong structural drivers.