FMCG Leads a 600-Point Sensex Bounce, but a 5% US Yield and $31 Billion of Foreign Outflows Keep the Rally on Probation

Indian shares staged a broad bounce on Thursday, October 29, a day after the Sensex lost 353 points. By about 12:30 pm the Sensex was at 73,822, up 576 points or 0.79%, after touching an intraday high of 73,864. That high was 617 points above Wednesday's close. The Nifty 50 was up 168 points at 22,867, close to its day's high of 22,874.

The more telling number was fear, not price. India VIX, the market's gauge of expected volatility, fell about 4%. Every major sectoral index except autos was higher.

Consumer stocks did the heavy lifting

The Nifty FMCG index rose about 2%, the best of the sectors, with ITC and Hindustan Unilever each up roughly 2-3%. The PSU Bank and IT indices both added about 1%. Smallcaps rose close to 1% and beat midcaps, which were only slightly higher.

Among Sensex stocks, Adani Ports led with gains of more than 5% after its quarterly results and higher full-year guidance. Power Grid rose about 4% and Kotak Mahindra Bank about 3%. Eternal and NTPC also added 2% or more. On the other side, Trent fell nearly 2% ahead of its results, and Asian Paints slipped about 1.1% around the time it reported. Tata Steel, HDFC Bank and Maruti Suzuki were also lower. The Nifty Auto index fell close to 1%, the only sector in the red.

The Fed helped, but only a little

The immediate trigger was the US Federal Reserve's decision overnight to hold its policy rate at 3.75-4% (see our earlier coverage). The vote was 10-2, and both dissenters wanted a hike. Markets are now pricing in a 25 basis point increase in December.

That is why several analysts called this a hawkish pause. The US 10-year Treasury yield stayed around 5.02%, which means US bonds still offer a high, safe return that competes with emerging markets like India for foreign money. Wall Street rose modestly overnight, and Asia was mixed. Japan's Nikkei edged up, while South Korea's KOSPI fell 2.4% after a 6.6% surge on Wednesday.

Why strategists are talking about tax

The more interesting thread came from Geojit's chief investment strategist, V K Vijayakumar. He said hopes are rising that the next Union Budget will offer relief on long-term capital gains tax. His argument is that foreign selling has become large enough to hurt the wider economy, with about $31 billion pulled out of Indian shares so far in 2026.

He linked that outflow to a chain of problems. Crude has stayed high, trading around $110 a barrel on Thursday, and that widens the trade and current account deficits. That weakens the rupee, which opened at 95.17 to the dollar, and the weaker rupee pushes up the cost of imports. A poor monsoon is adding to inflation pressure on top of that. He also said investor interest in chip and AI stocks in South Korea and Taiwan is pulling foreign money away from India.

A bounce inside a bad year

Thursday's gains need to be read against the year so far. The Sensex is down about 11,387 points, or 13.4%, in 2026, and the Nifty is down about 12.6%. A one-day rally of under 1% does not change that trend. The Nifty level of about 22,830, which traders flagged before the open as the threshold for a near-term recovery, was crossed in the morning. Whether it holds at the close will tell more than the midday high.

For now, the session shows that domestic buyers will step in when global news is merely less bad. A lasting turn likely needs one of three things: lower US yields, cheaper oil, or a policy change that brings foreign investors back.

This is an original summary based on public reporting. See our editorial policy for how we source, write, and correct our stories.