Indian stock benchmarks achieved unprecedented heights on Thursday, marking their first record peaks in over a year. The resurgence was fueled by cooling valuations, anticipations of corporate earnings recovery, and a resilient economic framework supported by favorable fiscal and monetary policies.
The Nifty 50 index ascended 0.40% to reach 26,310.45 during trading, while the BSE Sensex advanced 0.52% to 86,055.86. Both indices surpassed their previous all-time highs established in September 2024, though they closed marginally lower due to profit-taking activities.
This market breakthrough follows a 14-15 month consolidation phase that effectively narrowed the disparity between corporate earnings and stock valuations. Asia’s third-largest economy demonstrates remarkable vigor, with projections indicating nearly 7% growth for the July-September quarter and an anticipated 6.8% expansion for the current financial year ending March 2026.
Financial institutions express robust optimism regarding market prospects. J.P. Morgan analysts project the Nifty could reach 30,000 by late 2026, suggesting approximately 15% upside potential. The September quarter witnessed India’s strongest corporate earnings revival in over a year, driven by consumption recovery, benign inflation, tax reductions, and reduced borrowing costs.
Market valuations have moderated significantly from previous levels, with the Nifty currently trading at 22.7x 12-month forward price-to-earnings ratios, down from 23x-25x multiples observed 14 months prior. This valuation adjustment, combined with strengthened earnings outlook, has attracted renewed foreign investor interest while sustaining domestic participation.
Notably, equity mutual funds have demonstrated consistent inflows since February 2021, with systematic investment plan contributions reaching record levels despite market volatility. Domestic institutions have purchased shares worth 2.92 trillion rupees ($32.94 billion) in 2025, substantially offsetting foreign outflows of $16.9 billion during the same period.
Analysts highlight that India’s relatively limited artificial intelligence exposure provides global investors with a natural hedge against technology sector volatility. Furthermore, India’s significant underperformance compared to Asian and emerging market peers over the past year may catalyze foreign capital回流, potentially accelerated by a prospective India-U.S. trade agreement.