Why the Stock Market Rose Today: Key Factors Behind the 444-Point Sensex Surge and Nifty Crossing 24,700
June 5, 2025 — ETMarkets.com
Indian stock markets closed on a positive note this Thursday, with the benchmark indices registering significant gains. The BSE Sensex surged by 444 points (0.55%) to close at 81,442, while the NSE Nifty strengthened by 131 points (0.53%) to settle above the 24,700 mark at 24,750. During the intraday session, the Sensex climbed as high as 913 points, and Nifty briefly touched 24,899, reflecting strong bullish momentum. This upward trajectory was supported by multiple bullish triggers in the market.
Market Highlights and Sector Performance
Pharmaceutical stocks and heavyweights like Reliance Industries led the charge, contributing substantially to the market’s robust performance. On the sectoral front, Nifty Realty and Nifty Pharma outperformed, gaining 1.75% and 1.3%, respectively. Additionally, Nifty IT and Nifty Metal indices advanced by 0.5% each. Broader market indices also echoed the positive sentiment, with the Nifty Smallcap rising 1% and the Midcap index up by 0.7%.
Market capitalization expanded notably, with all listed companies on the BSE collectively increasing in value by Rs 2.4 lakh crore, reaching Rs 447.61 lakh crore — a reflection of widespread investor confidence.
Four Major Factors Driving the Market Rally
- Weakening U.S. Dollar and Declining Treasury Yields
Investor sentiment was buoyed by a softer U.S. dollar, which dropped to a two-day low of 98.82 on the dollar index, extending a decline of roughly 0.4%. A weaker dollar tends to be favorable for emerging markets like India, as it attracts foreign investment inflows and supports the Indian rupee.
Simultaneously, U.S. Treasury yields fell sharply amid subdued economic data that raised expectations for rate cuts by the Federal Reserve. The 10-year Treasury yield dropped 2.4% to 4.355%, while the 30-year yield slipped 1.95% to 4.864%. This decline in yields reduces borrowing costs and encourages investments in equities, both domestically and internationally.
VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, noted, “The drop in yields is positive for emerging markets like India in the medium term, although geopolitical and trade-related uncertainties may limit gains in the near term.”
- Heightened Expectations of RBI Rate Cut
The Reserve Bank of India’s upcoming monetary policy meeting, scheduled for Friday, stirred optimism among investors. They anticipate a third consecutive cut of 25 basis points in the key lending rate. Such a move by the RBI would inject additional liquidity into the economy and potentially boost growth prospects across sectors. This anticipation was a significant catalyst in supporting the market upswing.
- Foreign Institutional Investors Return to the Market
After three days of net selling, foreign institutional investors (FIIs) returned as net buyers on June 4, purchasing equities worth Rs 1,076 crore. Meanwhile, domestic institutional investors (DIIs) maintained their buying momentum, investing Rs 2,566 crore and extending their streak to 12 consecutive days of positive inflows. This renewed buying interest from both foreign and domestic investors reinforced the market’s positive dynamics.
- Declining Crude Oil Prices
Global oil prices dropped by nearly 1%, giving additional relief to the markets. The decline followed U.S. data that revealed unexpectedly high inventories of gasoline and distillates, signaling weaker oil demand. Moreover, Saudi Arabia’s decision to cut crude oil prices for July deliveries added to the downward pressure on oil prices. Brent crude settled at $64.85 per barrel, while WTI crude closed at $62.74. Lower crude prices typically ease inflationary pressures, benefiting sectors sensitive to fuel costs and improving overall economic outlook.
Looking Ahead
Market participants are closely watching the RBI’s policy decision and global economic signals for further cues. While rate cut expectations and easing commodity prices fortify the current rally, ongoing geopolitical developments and trade uncertainties underscore the need for cautious optimism.
For investors, the current environment presents selective opportunities, especially in pharmaceuticals, realty, and IT sectors, which have demonstrated resilience and growth potential.
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Top trending stocks showcased strong gains: Reliance Industries, Infosys, SBI, HDFC Bank, and Axis Bank continued to attract investor interest.
Reported by ETMarkets.com for Smart Money Mindset