Sensex jumps 1,400 points, Nifty reclaims 23,000 - Key factors behind Thursday's stock market rally

Indian equities have staged a sharp rally on Thursday, October 15, owing to a confluence of multiple factors, which contributed to the Sensex gaining as much as 1,200 points and the Nifty attempting to reclaim the 23,000 mark for the first time after September 25.

Global Tailwinds Contribute To Rally

Everything that could have possibly fallen into place for today's stock market rally, did so. Bond yields in the US cooled off sharply after surging to as high as 5.32% on Wednesday evening, once the CPI data was announced. However, the yields are off more than 20 basis points from those levels and are now below the mark of 5.1%.

Crude oil prices are also easing, and although they are still above the mark of $100 a barrel, they have eased and are not heading higher, despite the continued escalation between Saudi Arabia and the Houthis.

There has been no significant movement in the US Dollar Index either, as it continues to remain around levels of 102.

The AI Sell-Off Intensifies

The AI and Semiconductor stock rally, which has been the biggest reason behind the underperformance of the Indian stock market, has seen some significant unwinding during the course of the week. First due to fears of increasing competition from China's CXMT, and now due to fears of whether or not the loads of debt taken by the companies to build out the AI infrastructure will survive the repayment test or not.

The Nasdaq indices sold off over 2% overnight, while the KOSPI in South Korea saw steeper losses as the investor exodus from the once shining star in the Asia-Pacific earlier this year, continued. Foreign Investors sold $1.8 billion worth of shares in Korea on Thursday morning itself, while the total selling so far in October has been worth over $10 billion.

Concerns have been raised over the debt repayment sustainability of companies such as CoreWeave and Oracle, both of which plunged overnight, with yields on their debt maturing in six years from now, surging to record levels of 15%.

The sustained selling in the AI stocks has turned out to be a blessing in disguise for Indian IT companies, with the Nifty IT index having gained in four out of the last five trading sessions

, surging 11% during this period. Stocks like TCS, Infosys command a significant weightage on the Nifty 50, and a double-digit upmove seen in these stocks resulted in the index moving higher as well.

Reliance Industries Fires With Gains

Shares of the Nifty 50 heavyweight, Reliance Industries Ltd. also surged on Thursday, gaining nearly 3%, after its telecom unit Jio Platforms announced details of its upcoming Initial Public Offering (IPO), which will now become the biggest IPO in Indian history, surpassing the ₹27,870 crore by Hyundai Motor India back in 2024.

Jio Platforms plans to raise over ₹30,000 crore through a fresh issue of shares and plans on using the proceeds to pare down debt. The company has also reserved shares for existing shareholders of Reliance Industries under the shareholder quota, as well as for eligible employees.

Largecaps Playing Catch-up

Largecap stocks on the Indian stock market have been severely beaten down and have underperformed the midcaps through the course of the year.

It is this catch up trade that also led to large lenders such as ICICI Bank, HDFC Bank, Axis Bank gain between 2% to 3% on Thursday, ahead of their quarterly result report on Saturday.

Earnings will continue to grab center stage as largecap banks report results on the weekend, and other major results continue through the course of the day.