Diwali Lights Up Indian Stocks: Small caps shine amid optimism

Indian stocks experienced a festive boost in a special late-evening session celebrating Diwali, the Hindu festival of lights.

The S&P BSE Sensex rose by 0.6 per cent to reach 65,259.45, led by prominent gains in heavyweights such as HDFC Bank Ltd., Infosys Ltd., and Reliance Industries Ltd, Bloomberg reported on Sunday.

The NSE Nifty 50 Index also saw a climb of 0.5 per cent, with all 19 sector gauges compiled by BSE Ltd. making advances. Coal India Ltd. notably surged the most in two weeks after reporting earnings that exceeded expectations.

The buoyant performance extended to small-cap stocks, which have outperformed global counterparts this year. A gauge measuring their performance recorded a 1.1 per cent increase, closing at a record high.

Optimism surrounding India's economic outlook and corporate earnings contributed to the positive sentiment. ANZ highlighted India's superior growth dynamics compared to other regional economies, noting the strong performance of its companies.

Reflecting the auspicious nature of Diwali, the Sensex has shown a historical trend of ending higher in eight out of the past 10 Diwali-day sessions, also known as Muhurat trading. SinceDiwali 2022, the Sensex has risen approximately 9 per cent, outperforming the broader market.

The broader market rally has been fuelled by record inflows into companies closely tied to one of the world's fastest-growing economies. The Diwali session, determined by the new moon, is considered the most opportune time for new investments, symbolising the initiation of a prosperous financial year. On average, Indian stocks have delivered returns of 17 per cent in the past 10 Hindu calendar years.

While the festival session marked a positive start, attention now turns to the regular trading week ahead. Trading in India resumes on Monday following the Diwali celebration, with Tuesday being a holiday.

(With inputs from Bloomberg)

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