V K Vijayakumar, chief investment strategist at Geojit Investments, attributed the recent market rally to a combination of favourable domestic and global factors, including increased buying by foreign institutional investors (FIIs), attractive valuations, lower crude oil prices and a decline in US bond yields. He also pointed to the winding down of the AI trade and improving corporate earnings, as reflected in the Q2 results, as factors supporting the rally.

“A rare convergence of positive news for India – FIIs turning aggressive buyers, fair valuations, winding down of AI trade, dip in crude price, decline in US bond yields and steadily improving corporate earnings as reflected in Q2 numbers- triggered the rally,” he said. Vijayakumar further said the victory of Democrats in the US elections had raised concerns about a slowdown in AI spending and a correction in AI stocks, providing a trigger for the rally in Indian markets.

“The FII buying in India is likely to sustain paving the way for further rally in large-caps. It is important to understand that FII allocations track index weights during major market shifts,” he said. Meanwhile, despite the benchmark indices opening in negative territory, most sectoral indices on the NSE began the session with gains. Nifty IT was the only sectoral index to open lower, declining 0.38%.