Sensex jumps over 600 points: 4 factors driving stock market rally

The Sensex rose more than 600 points on Tuesday as IT shares led a broader market advance. The rally highlighted how domestic buying is cushioning foreign outflows despite inflation, crude and bond yield concerns.Sensex and Nifty rebounded sharply in early trade on Tuesday. New Delhi,Oct 13, 2026 10:17 ISTBenchmark stock market indices rebounded on Tuesday as the Sensex surged over 600 points, while the Nifty 50 climbed close to the 22,600 mark.At around 10 am, the BSE Sensex was up 660.75 points, or 0.92%, at 72,585.43. The NSE Nifty 50 gained 202.20 points, or 0.90%, to trade at 22,565.55.Information technology (IT) stocks were at the forefront of the rally. TCS jumped 5.05%, HCL Technologies rose 4.67%, Tech Mahindra gained 3.22% and Infosys advanced 2.53%. Banking, financial services and consumer-facing stocks also traded higher, lending support to the broader market.However, the rally comes against a challenging backdrop of persistent foreign investor outflows, a weakening rupee and elevated crude oil prices. Market experts say domestic institutional buying continues to cushion the impact of foreign selling, even as global bond yields and inflation remain key concerns. IT stocks lead the chargeTechnology stocks were the biggest drivers of the rally, with all four major IT names in the Nifty 50 posting strong gains. TCS rose 5.05%, HCL Technologies climbed 4.67%, Tech Mahindra advanced 3.22% and Infosys gained 2.53%. The gains in IT stocks helped lift the broader market, although the available price data does not establish a specific trigger for the buying. Investors will be watching whether the momentum holds as trading progresses.Domestic investors cushion foreign sellingDespite Tuesday’s recovery, the broader market trend remains complicated by sustained foreign institutional investor (FII) selling. Domestic institutional investors (DIIs), including mutual funds, have been absorbing much of that selling, helping limit the pressure on share prices.Dr VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, said there were no clear triggers to change the ongoing trend of FII selling and DII buying in the cash market.According to Vijayakumar, foreign investors sold shares worth Rs 1,708 crore in the previous session. He attributed the moderation in selling partly to the rupee’s recovery, which followed measures by the Reserve Bank of India (RBI) to restrict trading in foreign exchange derivatives and increase the cost of such trades.However, the pressure may persist. Vijayakumar pointed to the US 10-year Treasury yield hovering above 5.2% as a factor that could continue to encourage foreign investors to move money away from emerging markets such as India.Domestic investors, meanwhile, have continued to invest through mutual funds. Net inflows into mutual funds touched a record Rs 38,307 crore in September, according to the figures cited by Vijayakumar. He expects domestic institutions to continue absorbing foreign selling, a trend that could support the market even amid persistent global uncertainty.He added that long-term domestic investors could benefit from continuing their systematic investments during the current period of volatility.Banking and financial stocks add supportBanking and financial stocks also contributed to Tuesday’s gains. HDFC Bank rose 1.52%, Bajaj Finserv gained 1.18%, Bajaj Finance advanced 0.99% and ICICI Bank added 0.42%. State Bank of India was up 0.53%.The gains came even as investors weighed the implications of rising inflation and the possibility of tighter monetary policy.Vijayakumar said September’s consumer price index (CPI) inflation reading of 5.54% had come in as expected, but food inflation at 7.74% and Brent crude prices consistently above $100 a barrel were raising concerns about the inflation outlook.He expects the RBI to raise interest rates in December, describing such a move as a foregone conclusion. He also argued that higher rates could be margin-accretive for banks, although the actual impact would depend on how lending rates, deposit costs and credit demand evolve.The RBI’s eventual decision will depend on incoming inflation and economic data, rather than any single indicator.Broad-based buying lifts sentimentThe rally extended beyond IT and banking stocks. Hindustan Unilever rose 1.31%, Eternal gained 1.38%, Trent advanced 1.81% and ITC added 0.85%. Reliance Industries was up 0.56%, while Mahindra & Mahindra gained 0.77%.The breadth of the advances suggests that buying interest extended across several sectors, rather than being confined to a handful of technology stocks. However, some shares bucked the trend, with NTPC falling 0.92%, Power Grid declining 0.44% and Maruti Suzuki slipping 0.37%.What should investors watch next?Tuesday’s gains offer relief after the previous session’s decline, but the broader market outlook remains tied to several competing forces. Domestic institutional buying is helping absorb foreign outflows, while the rupee’s recent recovery has offered some relief. At the same time, elevated US bond yields, rising food inflation and expensive crude oil remain potential headwinds.The immediate question is whether the buying momentum can sustain itself through the session. A durable recovery would require continued participation across sectors, while easing foreign outflows and greater stability in the rupee could improve sentiment further.For now, the market is being supported by domestic liquidity, even as global factors continue to create uncertainty. The Sensex’s 600-point jump is a strong move, but it does not by itself signal that the underlying pressures have disappeared.- Ends