Bank Nifty Hits Record High as Markets Surge to 52-Week Peak Ahead of Diwali

The Indian stock market delivered a spectacular performance on October 17, 2025, as bulls staged a powerful comeback ahead of the Diwali festivities. The Sensex and Nifty 50 both hit their 52-week highs, while the Bank Nifty stole the spotlight by surging to a fresh all-time high.

At the close, the BSE Sensex stood at 83,952.19, up 484.53 points or 0.58%, while the NSE Nifty 50 settled at 25,709.85, gaining 124.55 points or 0.49%. Notably, both indices touched their intraday highs during the trading session—Sensex peaked at 84,172, while Nifty climbed to 25,781.50.

This marks the third consecutive session of gains for both benchmarks, adding a cumulative 1,900 points to the Sensex and 562 points to the Nifty over the past three trading days. The indices are now just 2% away from their all-time highs recorded on September 27, 2024.

Bank Nifty Steals the Show with Record-Breaking Rally

The standout performer of the day was the Bank Nifty index, which surged past its previous record high of 57,628 to touch 57,651 during intraday trade. This marks a remarkable recovery of nearly 10,000 points from its March 2025 low of 47,702.

Banking stocks witnessed robust buying as investors positioned themselves ahead of quarterly earnings announcements from heavyweight lenders HDFC Bank and ICICI Bank, scheduled for October 18. The strong performance was broad-based across both public and private sector banks.

Since hitting lows in March, the banking index has delivered stellar returns. Canara Bank emerged as the top performer, surging 52% from the March bottom. AU Small Finance Bank followed with a 46% gain, while Punjab National Bank and Bank of Baroda both rallied 30%. Other major gainers included IDFC First Bank (up 28%), State Bank of India (up 22%), and Federal Bank (up 19%). Among the large private banks, HDFC Bank, ICICI Bank, and Axis Bank all advanced between 17-18% from their yearly lows.

”The rally in banking stocks is driven by expectations of strong Q2 earnings, healthy credit growth, and improving asset quality metrics,” said Prashanth Tapse, Senior VP (Research) at Mehta Equities Ltd.

What’s Fueling the Market Rally?

The pre-Diwali surge is being driven by multiple positive factors coming together at the right time. Here are the eight key catalysts behind today’s market boom:

1. Foreign Institutional Investors Return

After months of relentless selling, Foreign Institutional Investors (FIIs) have made a comeback. Between October 7 and 14, FIIs were net buyers in five out of seven sessions, pumping over ₹3,000 crore into the secondary market. On October 16 alone, FIIs purchased equities worth ₹997.29 crore, while Domestic Institutional Investors (DIIs) added a massive ₹4,076.20 crore.

This marks a dramatic reversal from the heavy outflows seen in previous months—October’s net FII outflows stand at just ₹903 crore compared to ₹22,761 crore in September, ₹41,908 crore in August, and ₹38,214 crore in July.

2. US Bond Yields Slide to Multi-Year Lows

US Treasury yields have declined sharply, creating a risk-on environment for emerging markets. The two-year yield fell to a three-year low, while the 10-year yield dropped to a six-month trough near 3.95%. Lower US yields make Indian equities more attractive for global investors seeking higher returns.

3. Progress in India-US Trade Relations

Investor sentiment received a boost from positive developments in bilateral trade discussions between India and the United States. US President Donald Trump stated that Prime Minister Narendra Modi had pledged to stop buying oil from Russia, while Indian officials confirmed that discussions on strengthening energy cooperation are ongoing. This has eased concerns about potential trade friction.

4. IPO Pressure Fades

The primary market had been under pressure over the past two weeks due to large IPOs from Tata Capital and LG Electronics India, which diverted liquidity. With the pipeline now quiet, funds have flowed back into secondary markets, supporting the rally.

5. Short Covering Amplifies Gains

A sharp rebound in frontline stocks has triggered widespread short covering across sectors. “Even now, there are significant short positions in the system, and the market’s strength might keep the bears on the back foot, facilitating further short covering,” noted Dr. V.K. Vijayakumar, Chief Investment Strategist at Geojit Investments.

6. Rupee Strengthens Against the Dollar

The Indian rupee opened stronger at 87.75 against the dollar on October 17, up from 87.82 the previous day, gaining over 1% in two sessions. This was helped by the Reserve Bank of India’s pre-market dollar sales through state-run banks, which squeezed speculative long-dollar positions.

7. Crude Oil Prices Drop

Global crude oil prices extended their decline, with Brent crude trading near $61 per barrel and WTI around $57.37. The dip followed news of a planned meeting between President Trump and Russian President Vladimir Putin in Hungary to discuss ending the Ukraine war. For India, a major crude importer, lower oil prices help narrow the trade deficit, reduce inflationary pressures, and improve corporate margins.

8. Festive Season Optimism

With Diwali just around the corner, festive sentiment is adding to the positive mood. Historically, Indian markets tend to perform well during the festival season as consumer spending picks up and corporate earnings expectations rise.

Sectoral Performance: FMCG Leads, IT Lags

On the sectoral front, Nifty FMCG emerged as the top gainer, surging 1.37%. The rally was supported by strength in auto, banking, financial services, pharma, realty, and consumer durable stocks. Conversely, Nifty IT and Media were the biggest laggards, falling 1.63% and 1.56%, respectively.

In the broader market, sentiment was mixed. The Nifty MidCap 100 declined 0.57%, while the Nifty SmallCap 100 closed marginally lower by 0.05%.

Top Gainers and Losers

Asian Paints led the gainers on the Sensex, surging nearly 5% to extend its rally to the third consecutive day. The stock hit an intraday peak of ₹2,532, driven by investor confidence following the recent announcement of its new white cement facility in Fujairah, UAE. Other major gainers included Mahindra & Mahindra (up 2.65%), Bharti Airtel (up 2.31%), ITC, Hindustan Unilever, and ICICI Bank.

On the losing side, IT stocks bore the brunt of selling pressure following mixed quarterly results. Wipro plunged 4.48% after its Q2 earnings missed Street estimates, despite reporting a marginal 1.2% year-on-year rise in net profit. Infosys fell 1.75%, while other laggards included HCL Technologies, Tech Mahindra, and Eternal.

What to Watch Next

Market participants will now closely monitor the following developments:

• Quarterly Earnings: Results from major banks (HDFC Bank, ICICI Bank) and corporates (Reliance Industries, JSW Steel, Havells India, Hindustan Zinc) scheduled for release in the coming days.

• Technical Levels: For the Nifty, immediate support is placed at 25,500, while resistance lies at 25,850-26,000. A decisive breakout above 26,000 could pave the way for a move toward the all-time high of 26,277.

• FII Flows: Sustained buying from foreign investors will be crucial to maintain the upward momentum.

• Global Cues: The outcome of the Trump-Putin meeting in Hungary and developments in US-China trade tensions will influence global risk sentiment.

• Crude Oil Prices: Further declines in crude could provide additional tailwinds for Indian equities.

• Muhurat Trading: The special Diwali trading session on October 20, 2025, traditionally considered auspicious, could see increased retail participation.

”Technically, Nifty looks strong for further gains, and a buy-on-dips strategy could work well in the near term,” said Rupak De, Senior Technical Analyst at LKP Securities. “Holding above 25,000 levels remains essential for sustaining bullish sentiment.”

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Disclaimer:

This article is only for information purposes and is not investment advice. Before investing, do your own research.