The Bombay Stock Exchange's benchmark Sensex achieved a significant milestone on Thursday, breaching the 86,000-mark for the first time during morning trading sessions. This breakthrough comes after an arduous 14-month journey filled with volatility and uncertainty in the Indian equity markets.
The Long Road from 85,000 to 86,000
The journey to this new peak began on September 24, 2024, when the Sensex first crossed the 85,000 level following an impressive rally that started in December 2023. During that remarkable 10-month period, the index surged from 68,000 to 85,000, gaining 17,000 points representing nearly 25 percent growth.
However, the subsequent 14 months proved challenging for investors as the Sensex experienced significant fluctuations, oscillating between 71,000 and 85,000. The index hit its lowest point of 71,425 on April 7, 2025 and reached a high of 85,978 on September 27, 2024 before finally achieving the 86,000 breakthrough.
Global Factors Influencing Market Volatility
Multiple international developments contributed to this prolonged and volatile journey. The election of Donald Trump as US President in November 2024 introduced significant geopolitical uncertainty, with his repeated threats to impose tariffs on multiple countries including India creating market nervousness.
Trade tensions became a major concern for Indian markets, particularly with the imposition of 50 percent duties on certain Indian exports and potential higher US tariffs on IT and pharma exports. The speculation around tighter H1B visa norms additionally pressured Indian IT services stocks, causing several sell-offs during this period.
Global monetary policy also played a crucial role. From September to early November 2024, rising US bond yields and expectations of higher interest rates reduced appetite for emerging market equities, leading to capital outflows from India. However, recent signals from Fed officials about a possible rate cut in December could boost equity inflows into emerging markets.
Domestic Strengths and Challenges
Despite global headwinds, domestic economic fundamentals remained robust, supported by subdued inflation, declining Brent crude prices, and falling domestic interest rates. The resilience of domestic investors became particularly evident as foreign institutional investors pulled out Rs 1.48 lakh crore from the equity market since January 2025.
Indian investors continued demonstrating confidence through systematic investment plans, with monthly inflows through SIPs touching over Rs 29,000 crore. This consistent domestic participation provided crucial support to the markets during periods of foreign capital outflow.
However, domestic challenges included delays in key reforms such as GST simplifications and Insurance Bill amendments, which created negative sentiment at times. Recent positive developments include government steps to simplify GST and plans to table several economic bills in the upcoming Lok Sabha session.
Expert Views and Future Outlook
Market experts have welcomed this milestone while urging caution. Shrikant Chouhan, Head of Equity Research at Kotak Securities, stated, "Such milestones show that trends are shaped by patience, discipline and data, not short-term noise. Credit goes to the government, policymakers and retail investors who have supported the economy through uncertainties."
Prashanth Tapse, Senior VP Research Analyst at Mehta Equities Ltd, added, "Equity benchmarks scaling fresh record highs are being powered by resilient domestic inflows, improving global risk appetite, and renewed optimism around third-quarter earnings. While the undertone remains constructive, we expect only a measured upside from current levels."
Investor Caution and Strategic Approach
Financial experts have cautioned investors against over-enthusiasm or FOMO (fear of missing out) buying, noting that the current rally continues to be narrow. A significant portion of mid-cap and small-cap stocks, including several sector leaders, remains in a corrective or fragile zone despite headline indices hitting all-time highs.
Analysts recommend that investors avoid chasing high-priced, overvalued stocks and instead wait for corrections while adopting a selective buying approach. Sustaining the next leg of the rally will depend on a meaningful earnings recovery, stability in global macro factors, and continued domestic participation.
Tapse of Mehta Equities advised, "We recommend a selective, quality-focused strategy rather than chasing momentum at elevated levels." The market's future trajectory will likely be influenced by several factors including potential resolution of the Russia-Ukraine conflict, finalization of the Indo-US trade deal, and corporate earnings performance in the coming quarters.
