Sensex surges 650 points, Nifty above 24,350. 7 key factors behind today's D-Street rally

Published 3 July 2026 · finance

The Indian stock market extended sharp gains on Friday, with Sensex and Nifty rising more than 0.8% each on the back of easing Middle East

The Indian stock market extended sharp gains on Friday, with Sensex and Nifty rising more than 0.8% each on the back of easing Middle East conflict, lower expectations of Fed rate hikes, and other key factors.Sensex gained over 650 points, while Nifty 50 rose above 24,350 during Friday's trading session. The sharp gains added nearly Rs 2.4 lakh crore to the total market capitalisation of all companies listed on BSE, pulling it up to Rs 482 lakh crore.IT stocks continued to record strong gains, with HCL Tech, Tech Mahindra, Infosys and TCS shares rising 2-5% to lead gains on the Sensex. Tata Steel, Bajaj Finserv and Bharat Electronics shares followed, rising more than 1% each. Bucking the trend, M&M shares fell nearly 1% on Friday morning.Broader markets, however, sharply underperformed benchmarks, with the Nifty Midcap 100 index rising only 0.2% and the Nifty Smallcap 100 index rising 0.5%. This came as India VIX, which measures volatility in the market, dropped over 1% to 12.13.Also Read | Adani Enterprises increases QIP size to Rs 15,000 crore, draws bumper 3.8x bidsSectorally, Nifty IT jumped more than 2% to lead gains. Nifty Metal also rose over 1.5%. Nifty Auto and Nifty PSU Bank indices, however, slipped into the red. The overall market breadth was positive, with 1,832 advances and 607 declines on the NSE, while 91 remained unchanged.Here are the key factors boosting market sentiment today: 1) Fed rate hike worries cool downUS job growth slowed sharply in June and payroll gains for the prior two months were revised lower, data released on Thursday showed, pointing to a cooling labour market and prompting financial markets to reduce expectations for a near-term rate hike. The unemployment rate dropped to 4.2% last month from 4.3% in May as workers left the labour force, pushing the participation rate to the lowest level in more than five years."The figures challenged the narrative that the Fed remains on track to hike in the second half of this year," Reuters quoted Westpac analysts as saying in a research report.

The tepid jobs data doused traders' expectations of an imminent rate hike and raised the odds that the Fed will keep rates on hold until October.Traders are now pricing in a 46.8% probability that the U.S. central bank will keep rates steady at its meeting on September 15 to 16, compared to a 35.8% chance a day earlier, according to the CME Group's FedWatch tool.2) Rupee opens higherRupee rose 18 paise to 95.17 against the US dollar in early trade. This came on the back of a weaker US dollar after the tepid jobs report. The dollar index, which measures the greenback against a basket of currencies, was 0.2% lower at 100.77 after a 0.5% decline on Thursday. It is on course for its biggest weekly drop since early April.3) FII outflows taper offForeign investors remained net sellers of Indian equities, net selling shares worth nearly Rs 312 crore on Thursday, according to provisional data on the NSE. This is marginal when compared to the massive FII outflows seen earlier this year during the raging war in the Middle East.4) Heavy buying in IT stocksThe overall market optimism was boosted by strong buying in heavyweight IT stocks like HCL Tech, TCS and Infosys. The IT stocks are extending sharp gains today, after tumbling to fresh 52-week lows earlier this week.IT companies derive a significant portion of their revenue from the North American market. Rate hikes or a spike in inflation in the US can weigh on discretionary spending, which, in turn, may affect the sector's growth prospects. Hence, lower expectations of Fed rate hikes, along with low valuations, are boosting the IT stocks.5) Positive global cuesDalal Street is accompanying global peers in sharp gains today. South Korea’s Kospi jumped 2.5%, while Japan’s Nikkei gained around 1% on Friday morning. Hong Kong’s Hang Seng and China’s Shanghai Composite also rose nearly 1% each.On Wall Street, the Dow Jones Industrial Average rose more than 1% to post a record closing high on Thursday and a fourth straight week of gains.