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Diwali Month Brings Bullish Sentiment to Sensex

Strategic Insights

— 2 min read

The Reserve Bank of India's decision to maintain the status quo on interest rates, coupled with an upward revision in GDP growth estimates and a lowering of the inflation forecast, lifted investor confidence during the Diwali month. Additionally, the central bank's easing of rules for lending to capital markets and large companies signaled a supportive stance for growth, fueling optimism and driving strong momentum across equity indices.

Key Takeaways:

  • The RBI kept its policy interest rate unchanged at 5.5 per cent for the second consecutive time, citing concerns over tariff uncertainties.
  • The SBI reported that inflation in FY26 and FY27 is likely to be much lower than the RBI's projections of 2.6 per cent and 4.5 per cent respectively.
  • The World Bank raised India's growth forecast to 6.5% for FY26 from its earlier projection of 6.3% in June, but cut the forecast for FY27 by 20 basis points to 6.3% due to US tariff action.
  • India's outward foreign direct investment (OFDI) commitments declined 8.27% to $4419.43 million in September 2025, from $4817.89 million in September 2024.
  • Business sentiments in India moderated in Q2FY26 amid high global uncertainties, including additional US tariffs, according to the NCAER Business Expectations Survey.
  • India's exports to the US contracted, while shipments to non-US destinations remained robust, surpassing previous growth figures, according to Crisil.
  • China granted licenses to certain Indian companies to import rare earth magnets, marking a positive development in bilateral ties.
  • India's automobile exports grew 26% Y-o-Y in the September quarter, driven by highest-ever shipments of passenger vehicles, two-wheelers, and three-wheelers, according to SIAM data.

Statistics:

  • The Sensex witnessed fireworks during the Diwali month, driven by bullish sentiment.
  • The RBI's policy interest rate remained unchanged at 5.5 per cent for the second consecutive time.
  • The SBI projected inflation at 2.6 per cent and 4.5 per cent for FY26 and FY27 respectively, lower than the RBI's projections.
  • The World Bank raised India's growth forecast to 6.5% for FY26 from 6.3% earlier.
  • India's outward FDI fell 8.27% to $4419.43 million in September 2025, from $4817.89 million in September 2024.
  • Business sentiments in India moderated in Q2FY26, according to the NCAER survey.
  • India's exports to the US contracted by 11.9% to $5.5 billion in September 2025.
  • China granted licenses to certain Indian companies to import rare earth magnets.
  • India's automobile exports grew 26% Y-o-Y in the September quarter.

Sources:

  • RBI's bi-monthly monetary policy (no date provided)
  • SBI report (no date provided)
  • World Bank's South Asia Development Update (no date provided)
  • RBI data report (September 2025)
  • NCAER Business Expectations Survey (Q2FY26)
  • Crisil report (no date provided)
  • Ministry of External Affairs statement (no date provided)
  • SIAM data (September quarter)
  • FICCI survey (Q2FY26)
  • Commerce and Industry Minister Piyush Goyal statement (no date provided)
  • Contify.com (no date provided)

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