Indian equity markets witnessed a massive rally on Dhanteras, with benchmark indices posting strong gains amid heavy buying by foreign institutional investors (FIIs). The Sensex surged 1,718.01 points, or 2.16 per cent, to close at 81,028.02, while the Nifty climbed 493.75 points, or 2.01 per cent, to settle above the 25,000 mark at 25,030.35.

The strong performance came even as global markets faced significant selling pressure, particularly in technology and artificial intelligence-related stocks. The divergence highlighted renewed investor interest in Indian equities ahead of Diwali.

FIIs Make Massive Comeback

Foreign institutional investors have returned to Indian markets after consistently withdrawing funds during September and the first half of October.

According to provisional NSE data, foreign investors purchased equities worth ₹14,975 crore in a single trading session on Thursday, marking their biggest single-day buying in nearly six years. Their investments reportedly touched nearly $5 billion over five trading sessions.

Global Markets Under Pressure

Global markets witnessed heavy losses amid concerns over AI-related investments and technology valuations. The Nasdaq reportedly declined nearly 6 per cent, while South Korea's KOSPI fell over 9 per cent and Japan's Nikkei dropped around 7 per cent.

Major technology stocks, including Nvidia, also witnessed significant declines, adding to global market uncertainty.

M&M Leads The Rally

Mahindra & Mahindra emerged as one of the major gainers, with its shares rising over 5 per cent following strong second-quarter results. Titan, Infosys, HCL Technologies, TCS and Bharti Airtel also registered gains of around 2 per cent.

However, the rally remained largely concentrated in large-cap stocks. The Nifty Metal index declined around 2 per cent, while the Nifty Smallcap 250 fell nearly 1.5 per cent and the Nifty Midcap 100 dropped over 1 per cent.

On the NSE, 2,236 stocks closed in the red, compared to 937 advancing stocks, while 99 remained unchanged.

Market Outlook: Caution Amid Optimism

Despite the strong rally, several concerns continue to weigh on investor sentiment. Crude oil prices have moved above $100 per barrel amid geopolitical tensions, while rising US bond yields and a weakening rupee remain key concerns.

India VIX, the market volatility index, also surged nearly 8 per cent to approach the 17 mark, signalling increased market uncertainty.

While strong corporate earnings and renewed foreign investor interest have boosted confidence in Indian equities, analysts believe investors should remain cautious amid global economic and geopolitical uncertainties.