Sensex, Nifty Extend Rally as SEBI Relief Boosts Sentiment

Indian stock markets opened higher on Friday, extending the previous session’s strong rally as falling US Treasury yields and regulatory relief from the Securities and Exchange Board of India (SEBI) lifted investor sentiment. The Sensex and Nifty 50 recorded their biggest single-day gains in four months on Thursday, supported by buying in banking and information technology stocks.

The market rebound also reflected optimism around corporate earnings and a recovery in global artificial intelligence-related stocks. However, elevated crude oil prices, inflation risks and continued foreign investor selling could limit the sustainability of the gains.

Sensex Surges 1,534 Points, Nifty Nears 23,000

The 30-share BSE Sensex jumped 1,533.72 points, or 2.11%, to close at 74,315.61 on Thursday, finishing near its session high. During the day, the index climbed as much as 1,548.4 points, or 2.12%, to reach 74,330.29.

The NSE Nifty 50 advanced 374.65 points, or 1.66%, to settle at 22,997.35, its highest closing level since September 25. The index finished just below the psychologically important 23,000 mark.

Heavy buying in banking, IT and Reliance Industries shares helped drive the rally. Improving sentiment around corporate earnings and easing crude oil prices also supported demand for Indian equities.

According to a Reuters report, the benchmarks’ strong performance followed a rebound in global AI-related stocks and growing optimism among investors about company earnings.

SEBI Reverses Closing Auction Session Plan

One of the key factors supporting market sentiment was SEBI’s decision to reverse its earlier plan to use the closing auction session (CAS) to settle expiring stock and index derivatives contracts.

Under the revised arrangement announced on Thursday, expiring derivatives contracts will be settled using volume-weighted average prices recorded during the final 30 minutes of regular trading. The decision followed pushback from traders over the proposed use of the closing auction mechanism.

The regulatory change is expected to ease concerns about potential volatility around derivatives expiry sessions. Changes to settlement procedures can affect trading strategies, order execution and price movements near the market close.

Global brokerage Jefferies said the decision should reduce expiry-day volatility associated with the closing auction session. The firm also indicated that the change could benefit brokers whose order activity had remained below pre-CAS levels.

Falling US Treasury Yields Support Investor Confidence

Declining yields on longer-dated US Treasury securities provided another source of support for equities. Yields fell to their lowest levels since September amid concerns about slowing AI-related growth and expectations that the US Federal Reserve would leave interest rates unchanged at its next meeting.

US Treasury yields influence global financial conditions by affecting borrowing costs and the relative attractiveness of different asset classes. A decline in yields can support equity valuations, although the impact varies depending on the economic outlook and investor expectations.

Developments in global technology markets also remained important for Indian investors. The recovery in AI-linked shares helped improve sentiment, while expectations surrounding quarterly earnings encouraged buying in major Indian companies.

Crude Oil Near $106 Keeps Inflation Concerns Alive

Despite the sharp gains, analysts cautioned that the recovery could remain fragile because of elevated oil prices and persistent inflation risks.

Brent crude futures hovered around $106 per barrel as investors assessed geopolitical developments in the Middle East and possible US measures to ease restrictions on tankers associated with Iran’s so-called shadow fleet.

High crude oil prices are a concern for India because the country relies heavily on imported oil. Sustained increases can raise import costs, put pressure on inflation and affect corporate profitability by increasing transportation and production expenses.

Higher energy costs can also complicate the outlook for monetary policy and household spending. These risks could weigh on equities even when corporate earnings and global market sentiment provide short-term support.

Can the Market Rally Continue?

Investors will closely monitor corporate earnings, movements in US Treasury yields, crude oil prices and further regulatory developments to assess whether the rally can continue.

The strong gains in the Sensex and Nifty provide a boost to market confidence after recent volatility. However, a single session of sharp advances does not necessarily confirm a sustained recovery, particularly while inflation concerns and geopolitical uncertainty remain unresolved.

For now, Indian equities have carried Thursday’s momentum into Friday’s trading session, supported by regulatory relief and improving global sentiment. The direction of the market in the coming sessions will depend on whether these supportive factors can offset risks from expensive oil, inflation and uncertain global growth.