Markets
Sensex, Nifty Jump as Foreign Investors Return to Dalal Street Before Diwali
A global tech sell-off pushed money toward Indian equities, but analysts say lasting gains will depend on policy the government can be trusted to keep.
Desh Flash desk7 November 2026, 12:10 pm IST2 minUpdated 7 November 2026, 12:10 pm IST
Indian equities rallied sharply on Friday, with the Sensex and Nifty each gaining more than 2 percent, even as markets across Asia slid. The Sensex climbed past the 81,000 mark and the Nifty reclaimed 25,000, and the seven-day run before Diwali outpaced any comparable stretch in roughly 35 years.
The reversal is striking given how the month started. Foreign portfolio investors had been pulling money out of India through October, and the selling had dragged both benchmarks toward their weakest annual showing in at least a decade. The mood shifted as tensions in West Asia eased, removing a major source of pressure on the market in recent weeks.
A broader sell-off in global technology stocks, which erased about $2.5 trillion in market value, appears to have redirected some of that capital. Investors are questioning how quickly heavy spending on artificial intelligence will produce returns, and rising concern in the United States about tighter rules for data centres has added to the unease. Fund flows have since turned decisively. After net outflows of more than $3 billion through October, foreign investors have put in over $4 billion so far in November, including a $1.6 billion purchase on Thursday that was the largest single-day inflow in almost six years.
Some market watchers also point to expectations that the government could reduce or scrap long-term capital gains tax early next year. Whether that proposal materialises remains uncertain, but its prospect has been enough to draw attention to India's equity market.
Still, a rebound driven by money leaving a crowded American tech trade is not the same as a durable vote of confidence in India. Such flows can reverse just as fast if corporate earnings disappoint, valuations stretch again, or policy signals turn unpredictable. Promises of tax relief or upbeat statements from officials will not hold investors for long on their own.
What tends to keep foreign capital in place is consistency: stable and predictable taxation, rules that don't change without warning, deeper domestic capital markets, and stronger corporate governance. India has an opening to show it offers those things at a time when global investors are rethinking their technology exposure. Whether it converts this moment into lasting inflows will depend on how reliably it delivers them.
Read the original editorial at The New Indian Express.
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