Why Is Stock Market Rising Today? Know Key Factors Behind Sensex, Nifty Rally On December 5

Why Is Market Rising Today? The equity benchmarks staged a strong recovery from early losses on Friday, with the Sensex rallying over 500 points and the Nifty inching toward 26,200 after the Reserve Bank of India (RBI) announced a policy rate cut, lifting overall sentiment.

Markets opened on a choppy note amid persistent foreign fund outflows and mixed global cues, but momentum shifted following the monetary policy decision.

At around 12:40 p.m., the Sensex was up 501.35 points (0.59%) at 85,766.67, while the Nifty50 rose to 26,192.30, gaining 158.55 points (0.61%).

Among Nifty50 stocks, Bajaj Finance, Infosys, and Shriram Finance were the top gainers, rising up to 2%. InterGlobe Aviation and Hindustan Unilever were the notable laggards, falling

up to 3%.

Key Factors Driving the Market Rebound

RBI Rate Cut

The Monetary Policy Committee (MPC) reduced the policy rate by 25 bps to 5.25%, a unanimous decision. Lower rates ease borrowing costs for consumers and companies, typically supporting growth and boosting equity sentiment.

“The RBI rate cut further supports the strengthening market outlook due to improving earnings,” said Rahul Singh, CIO–Equities, Tata Asset Management, to Reuters. With a potential US rate cut next week, he added there is “valuation comfort for Nifty, which is now trading at nearly 21x forward earnings.”

Buying in Rate-Sensitive Stocks

Nifty Financial Services climbed 0.8 per cent, while the Bank Nifty and the PSU Bank indices advanced 0.5 per cent and 0.8 per cent, respectively, following the interest-rate cut. Lower borrowing costs typically spur loan demand and ease funding pressures, benefiting both banks and non-bank financial companies. More affordable credit also boosts purchases of homes and vehicles, lending support to the auto and real estate industries.

The auto index, another rate-sensitive segment, edged up 0.5 per cent, whereas the realty index gained 1 per cent.

Crude Oil Softens

Brent crude eased 0.17% to $63.15 per barrel. Lower oil prices reduce inflation risks and input costs, offering a tailwind to the broader market.

Supportive Global Market Setup

Most Asian markets traded firm, with South Korea’s Kospi and Shanghai’s SSE Composite in the green.
US markets ended largely flat overnight but not weak, helping improve risk sentiment.

Volatility Drops

The India VIX slipped 2.29% to 10.57, signalling a decline in volatility and improving investor risk appetite.