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Mumbai: The Street scored its best performance in seven months on Thursday, as a power shift in the US raised hopes of calm in West Asia and cooled crude oil prices. However, while cheaper oil augurs well for India, that alone may not bring back foreign investors in a big way, analysts said, as global capital continues to chase the artificial intelligence theme.
The Nifty soared 2.4% to close at 24,536.60, reclaiming its levels last seen in May, and its daily best gain since 8 April, when a short-lived US-Iran ceasefire agreement was reached. The key reason was an abrupt plunge in oil prices, with Brent crude trading at $95.50 a barrel at 5:00 pm India time, bringing it lower by roughly 14% through the week.
“Assuming we have enduring peace in West Asia, crude could gradually fall to below pre-war levels of $72-73 a barrel. That’s great news for not only India’s macros, but micros too,” said Sanjeev Prasad, managing director and co-head, Kotak Institutional Equities.
A day earlier, the Democratic Party secured control of both the House of Representatives and the Senate, in a major victory during the US midterm elections. The outcome establishes a divided government, granting Democrats crucial committee oversight and subpoena power to challenge President Donald Trump’s legislative and foreign policy agendas.
Thursday’s Street show came on the back of robust volumes. NSE recorded a turnover of ₹1.7 trillion, well above its fiscal-year daily average of ₹1.25 trillion. BSE market capitalization increased by over ₹8 trillion. The Nifty is now up 6.3% in the last four trading sessions, its best four-day streak in five years. The previous highest four-day gain was 8.9% in February 2021.
Easing crude prices, the possibility of an India-US trade deal, and curbs on US government spending could help reduce uncertainty in global markets, said Dhananjay Sinha, chief executive and co-head of equities and head of research at Systematix Group. “This could reduce the risk premium investors demand to hold Indian equities, providing some support to market valuations,” Sinha added.
The rupee strengthened by 17 paise to touch 94.47 against the dollar on Thursday, while the 10-year government bond yield has fallen from 7.29 to 7.16 in the last two days. The Nifty is now 10.6% above its previous 52-week low and 7.8% away from its year-high.
Even though foreign institutional investors (FIIs) have begun buying heavily Indian stocks again, it is too early for sharp reversal in flows, experts say. In the last five days, FIIs have net bought shares worth ₹36,494 crore in the secondary market. A big chunk of the purchases—almost 40%—was on Thursday, with FIIs net buying ₹13,801 crore in Indian equities. For context, they had net sold shares of ₹23,349 crore in the secondary markets in October, excluding the last day of October when the buying started. DIIs turned out net sellers with ₹10,107 crore worth shares today, as per provisional data from NSE.
India has been losing out as FIIs reallocate funds towards AI-related opportunities. However, the US mid-term election outcome is seen as more of a sentiment shock for AI stocks than a threat to capital expenditure.
Madhavi Arora, lead economist at Emkay Global Financial Services Ltd expects global AI capital expenditure growth to slow in 2027, largely because the investment base is already substantial, rather than because of political developments. Any new legislation restricting AI would also require President Donald Trump’s signature, while hyperscalers can largely fund their AI investments through their own balance sheets.
“To that extent, the AI trade and EM Asia’s semiconductor supply chain stay supported,” Arora said, adding that an FPI rotation into India as a hedge against AI exposure has limited merit for now.
A reduction in the intensity of the West Asia conflict, potentially driven by funding constraints facing the Republicans, could bring down oil prices, said Alok Singh, chief investment officer at Bank of India Investment Managers.
Among Nifty companies that have announced their Q2FY27 results so far, net profit has increased an average of 21% annually, while revenue rose 18%. The Nifty closed at a trailing price-to-earnings (P/E) multiple of 20.25x on Thursday, below the 10-year PE of 21.18x.
Kotak Institutional Equities’ Prasad expects earnings for the brokerage’s coverage universe to grow 12-14% this fiscal year, up from 8% in FY26. If valuations expand by one multiple point, the Nifty could rally 15% from current levels over the next year, he said.
The political shift in the US could also bring greater scrutiny of deals negotiated by Trump over the past couple of years, potentially creating uncertainty around some prominent Indian business houses, experts said.
Saurabh Mukherjea, founder and chief investment officer of Marcellus Investment Managers, said markets are likely to be wary of potential investigations into these deals.
“However, the possibility of the government scrapping long-term capital gains tax for FIIs will bring back some flows into India. And these flows are likely to favour clean, well-run, high-quality companies that have no exposure to deals that could come under scrutiny. So high-quality businesses with strong governance could attract greater foreign investor interest,” Mukherjea said.
Swarup Mohanty, chief executive officer at Mirae Asset Mutual Fund (India), said the risk-reward clearly favours large caps after a two-year consolidation led by time and price correction.
Srushti is a markets reporter at Mint. She writes on equity markets, and her areas of coverage range from brokers and exchanges to mutual funds and the fast-evolving alternatives space, including GIFT City, from the financial capital of India. She has an experience of over three years in journalism, and has previously worked at Moneycontrol. She has an undergraduate degree in mass communication and a postgraduate diploma in business and financial journalism from Asian College of Journalism, Chennai.<br><br>Srushti prefers meeting people from the industry over making calls. Her work aims to drive impact—her story on illegal gold imports, for instance, caught the government’s attention and contributed to a policy shift. She specialises in turning complex market data into clear, engaging stories so even her grandmother could understand futures and options.<br><br>Outside of the newsroom, she enjoys spending money on jewellery and watching thriller films—especially the kind that keep her awake at night. She spends 1.5 hours a day commuting in Mumbai locals, listening to horror podcasts on her way to work. She’s also very talkative—so reach out only if you have lots of time.
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