Sensex gains 746 pts, Nifty nears 24,600; 3 reasons behind Monday's rally

Why Sensex, Nifty rallied on Monday: Renewed buying in PSU banks, record MF inflows and hopes of a positive outcome from the US-Russia meet helped revive the market mood in India.

Equity market staged a smart pullback rally in trades on Monday, with PSU banks leading the way.  The BSE Sensex surged to the day's high of 80,636, and finally ended the day with a gain of 746 points or 0.9 per cent at 80,604. Meanwhile, the NSE Nifty 50 bounced back to an intra-day high of 24,602, and eventually settled at 24,585 - up 222 points or 0.9 per cent on Monday.  Among the Sensex 30 shares - Tata Motors, Eternal (formerly known as Zomato) and Trent gained around 3 per cent each. SBI, UltraTech Cement, Axis Bank and Larsen & Toubro were the other major gainers.  HDFC Bank and Reliance Industries, which were up over 1 per cent each, collectively contributed for one-third of the day's gain on the BSE Sensex.  "The market saw a relief rally post a 3-month low; a positive global cue and a gradual return of FIIs supported the sentiment. The PSU banks took the limelight amidst Q1 results from the banking major, while a broad-based momentum was visible across all sectors. Investors are positively assessing the upcoming US-Russia Summit this week, which may possibly give way to a de-escalation in geopolitical tensions.", said Vinod Nair, Head of Research, Geojit Investments in a note. 

Here are the top 3 reasons what led Monday's market rally.

 

 

PSU Banks lead charge

  India's largest state-run bank - SBI led the market recovery, after the bank a healthy set of earnings over the weekend. business growth and operational performance aided by treasury gains.  SBI reported a 12.5 per cent year-on-year (Y-o-Y) growth in net profit at ₹19,160 crore for Q1FY26, driven mainly by robust treasury gains. Going ahead, the bank's management expect a gradual recovery in FY26, supported by improved liquidity from CRR cuts, moderation in deposit cost, and benefits from the recent capital raise. READ MORE  Among other PSU Banks - Indian Bank rallied to a record high, and gained nearly 4 per cent. Union Bank of India, Punjab National Bank (PNB), Bank of India, Bank of Baroda and Canara Bank advanced over 1 per cent each. 

Record MF inflows lift market mood

  Mutual Fund (MF) net inflows in July rose to a record ₹42,700 crore, shows the Association of Mutual Funds in India (AMFI) data. This was a robust 81 per cent growth when compared with ₹23,587 crore reported in June 2025.  AMFI data showed the overall MFs Assets Under Management (AUM) rose by 1.3 per cent from ₹74.40 lakh crore to ₹75.35 lakh crore. Inflows in Mid- and Small-cap funds outpaced Large-cap funds.  "Quite a remarkable jump in net sales of equity oriented schemes close 42k cr. Growth upwards of 25 per cent is seen across categories from Large cap to Flexi cap to small cap, other categories such as thematic and Large & Midcap also has seen a very healthy growth", said Akhil Chaturvedi, Executive Director and Chief Business Officer at Motilal Oswal Asset Management Company in a note.  "I think Indian retail investors have come off age and seriously looking at equities a meaningful allocation to their portfolios. Consistent positive messaging from industry all stakeholders and larger belief in Indian capital markets in the long run seem to be the major reason for such massive growth.”, Akhil added.   

Investors pin hopes of Trump-Putin Aug 15 meet

  Investors have pinned hopes on the upcoming US President Donald Trump and Russia's Vladimir Putin meeting scheduled on August 15, 2025 to discuss a potential end the Ukraine war.  India has expressed hope that 'efforts' would be made to halt the conflict between Russia and Ukraine.  "India welcomes the understanding reached between the United States and the Russian Federation for a meeting in Alaska on August 15, 2025," MEA spokesperson Randhir Jaiswal said.  Market-men believe that a peaceful resolution, could help in ease the US-India trade war over Russian oil, and a possibility of rollback of the additional 25 per cent tariff on Indian goods.