Festive Rally Begins: FIIs Turn Buyers Again, Diwali Optimism Fuels Market Momentum

Image Source: The Economic Times

Foreign Institutional Investors (FIIs) have reversed their selling streak, turning net buyers ahead of Diwali 2025. Combined with festive optimism, strong Q2 earnings, and sectoral rallies, Indian markets are poised for a bullish run. Analysts expect Nifty and Sensex to test record highs during the upcoming Muhurat trading session.

India’s equity markets are entering the Diwali week with renewed optimism as Foreign Institutional Investors (FIIs) return as net buyers, reversing months of outflows. This shift, coupled with festive sentiment, robust Q2 earnings, and sectoral momentum, has lifted investor confidence across the board. Analysts now anticipate a bullish trajectory for benchmark indices in the coming week.

According to market trackers, FIIs have significantly reduced their selling pressure and initiated short covering, particularly in banking and FMCG stocks. The timing aligns with Muhurat trading on October 21, a symbolic session that traditionally sets the tone for the Samvat year ahead.

📈 Major Takeaways:

FIIs Resume Buying: After a prolonged sell-off, FIIs have turned net buyers, injecting fresh liquidity into Indian equities.

Festive Sentiment Boost: Diwali optimism is driving retail and institutional participation, with expectations of record highs for Nifty and Sensex.

Sectoral Strength:

Bank Nifty and FMCG stocks are leading the rally.
Auto and infra sectors are also seeing increased traction ahead of festive demand.
Q2 Earnings Support: Strong quarterly results from key players in banking, IT, and consumer goods are reinforcing bullish sentiment.
Muhurat Trading Outlook: Scheduled for October 21, this ceremonial session is expected to see high volumes and positive momentum, with analysts predicting a strong start to Samvat 2082.
Retail Participation: Domestic investors are actively building portfolios, encouraged by stable macro indicators and low inflation.

📌 Notable Updates:

Bajaj Broking and other firms forecast Nifty testing 20,000+ levels and Sensex nearing 70,000 during Diwali week.
Analysts advise focusing on banking, infra, and consumption themes for short-term gains.
With FIIs back in the game and festive cheer lifting sentiment, India’s markets are gearing up for a celebratory rally—one that could redefine investor confidence heading into 2026.

Sources: 1. Goodreturns – Diwali Week Market Predictions 2. MSN – FII Buying Resumes 3. India Today – Portfolio Picks for Diwali

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