Indian markets rally as rupee gains and bond yields ease

Indian equity markets staged their biggest single-day rally since April 8 on Thursday, with the Sensex gaining 2.6% to an eight-month high and the Nifty rising 2.4%, driven by falling crude prices, strong foreign investor inflows, and hopes of a resolution to the West Asia conflict. The Nifty closed at 24,536.60, while the Sensex ended at 79,310.01, pushing the combined market capitalisation of BSE-listed companies past ₹500 trillion for the first time. Foreign institutional investors bought equities worth ₹14,974.68 crore, their highest net inflow since February 2021, while domestic institutional investors recorded their largest-ever net outflow of ₹10,444.54 crore. The rupee strengthened for a fifth consecutive session to 94.47 against the dollar, and the benchmark 10-year government bond yield eased to 7.17%, its lowest since September 29. Brent crude futures traded in the $94-97 range, down about 16% from late October, which could ease inflationary pressures and reduce the need for further interest-rate hikes by the Reserve Bank of India. The Nifty remains about 7% below its 52-week high of 26,373.20, and analysts cautioned that the bond yield decline may not be sustainable due to competition for global capital from AI-related spending.