The Nifty surged 1.24% to 26,205, just shy of its record high of 26277.35 hit on 27 September last year, while the Sensex rallied 1.21% to 85609, short of its record 85978 hit on the same day last year. Among the Nifty’s top movers were HDFC Bank, Reliance Industries and ICICI Bank, which together pulled the index 0.36% higher.
The dollar index, which tracks the US dollar against six global currencies, is down 0.52% over the past two days. In the last three days, Japan’s Nikkei 225 is up 1.92%, China’s CSI 300 1.57%, and Kospi 2.99%.
“The weaker dollar has spurred a risk-on trade globally, which benefited us,” said Ashish Gupta, chief investment officer, Axis Mutual Fund. Gupta, however, warned that primary shares worth ₹30,000 crore were about to hit the market, which would raise volatility. “We will make a high, but it won’t be a smooth ride because of the supply,” added Gupta.
The dollar weakness stems from hopes of a US rate cut next month. A weaker dollar makes riskier emerging markets look more attractive to foreign investors. Foreign portfolio investors (FPIs) have sold shares worth ₹2.15 trillion in 2025 in the secondary market so far. Analysts hope that rate cuts and improved earnings growth in India will reverse the outflows seen this year.
“If rate cuts happen and the US yields fall, FPIs may consider India again, and if the US macro stabilizes and rate cuts come through, IT spending could revive, benefiting Indian IT companies,” said George Thomas, fund manager at Quantum Mutual Fund.
The Nifty commands a valuation of 18x FY28 earnings at present. Shrikant Chouhan, head of research at Kotak Securities said the index has a historical valuation band of 16-20x. At 18x, if there is no trade deal, the market could hit the lower end of the range, indicating a Nifty level of 23,200 by the end of next year. If there is a deal, the Nifty could test 29,000 (20x) by 2026 end, he said.
Any sustained move above 26,300 could drive a fresh rally in the index, potentially taking it higher towards 26,500, followed by 26,700, said Sudeep Shah, head of technical and derivatives research at SBI Securities.
Moreover, investors and traders have eased their derivatives positions as they moved into the December series. The Nifty’s November expiry was on 25 November.
The Nifty futures contract rollovers to December from the November series stood at 69%, against the three-month average of 81%, according to IIFL Capital Services. Marketwide rollovers, including Nifty and Bank Nifty index and stock futures, were more less in line at 91% against the three-month average of 92%.
Aside from cash market activity, rollovers signal the mood of investors and traders ahead of significant events. Like investors and traders buy or sell stocks in the cash market, they take cover or speculate on the derivatives segment through stocks and indices like Nifty and Bank Nifty futures and options.
These futures are either squared off or rolled over from one month to the next, while options end in profit or become worthless. Higher rollovers indicate a stronger bullish or bearish trend. Lower rolls suggest a lack of conviction or clarity.
“The rollovers of Nifty and Bank Nifty indicate a wait-and-see mode among investors and traders ahead of the Indo-US trade deal and the Fed rate decision next month,” said Chouhan of Kotak Securities.
The Nifty began the day on a light note as traders had unwound positions ahead of expiry, resulting in a strong move in the index. Usually, traders wait for a clear trigger after the unwinding of positions, and once a trigger emerges, they take fresh bets.
“With the index repeatedly failing to cross its all-time high, traders expected either consolidation or further correction and chose to square off rather than carry positions forward. As a result, rollover percentages were lower than the three- and six-month averages, leaving the market unusually light in terms of open positions,” said Rajesh Palviya, head of technical research at Axis Securities.
Historically, when this happens, the first day of a new series often sees a move in the opposite direction because smart players take advantage of a fearful, under-positioned market, Palviya added.
