Why Did the Stock Market Jump on Thursday? A Simple Look at the October 16, 2025 Rally
- Editor
- Oct 17
- 6 min read
by KarNivesh | 17 October, 2025
The Indian stock market witnessed an impressive rally on Thursday, October 16, 2025, when both benchmark indices surged more than 1%. The BSE Sensex closed at 83,467.66 points, gaining 862.23 points (1.04%), while the NSE Nifty ended at 25,585.30, up by 261.75 points (1.03%). This was the second straight day of gains and took the markets to their highest levels since early July 2025.
Let’s understand what caused this big move — both global and local factors worked together to lift investor confidence.
1. Global Trigger: TSMC’s Record AI-Driven Performance
The biggest spark came from Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest chipmaker. It reported outstanding third-quarter results with revenue touching ₹2,910 billion ($33.1 billion) — a 39.1% year-on-year profit surge.
More than half of this came from high-performance computing linked to artificial intelligence (AI) and 5G technologies. The company even raised its full-year revenue forecast to the mid-30% growth range and planned capital spending up to ₹3.31 lakh crore ($42 billion) to meet soaring demand.
This triggered a global rally in technology stocks — Nvidia rose about 2%, Broadcom by 3%, and Micron Technology by 3.5%. The optimism was not just about profits, but about the strong long-term demand for AI-related chips.
TSMC’s CEO said that “confidence in the AI megatrend is strengthening,” confirming that AI will remain a key growth engine. Asian markets like Japan, Taiwan, and South Korea also opened higher — and this positive wave eventually reached India too.
2. The Federal Reserve’s Dovish Signal
Another major factor was the U.S. Federal Reserve’s soft stance on interest rates. Chairman Jerome Powell hinted at more rate cuts during his October 14 speech. He noted rising risks to employment and said the Fed would “continue reducing rates” to support growth.
This was further backed by Fed Governor Christopher Waller, who supported a 0.25% rate cut at the upcoming meeting.
Lower U.S. rates are generally good news for emerging markets like India. They make foreign investors look for better returns elsewhere, encouraging capital inflows into developing economies. Powell also suggested the Fed was nearing the end of its balance sheet reduction, meaning more liquidity could flow into global markets — again supporting equities.
3. Geopolitical Boost: The Trump–Modi Trade Diplomacy
Adding to the excitement, U.S. President Donald Trump claimed that Prime Minister Narendra Modi assured him India would stop buying oil from Russia. Although India later clarified that no such agreement existed, the initial news created strong positive sentiment.
The prospect of better U.S.–India trade relations came at a time when Trump had earlier imposed a 25% tariff on Indian goods. Easing that tension could open doors for trade growth and foreign investment.
Experts noted that while India’s economy remains strong, exports in sectors like textiles, gems, and leather had faced challenges. Hence, improved trade ties with the U.S. would be a major boost for the markets.
Even if the statement was diplomatically unclear, investors chose to see it as a sign of progress — helping market optimism grow further.
4. Domestic Power: Axis Bank and Sectoral Strength
At home, the rally was anchored by the banking sector, led by Axis Bank, which gained about 4% after announcing its quarterly results.
Even though Axis Bank’s net profit fell 26% year-on-year to ₹5,090 crore, the bank’s operational metrics looked solid. Net Interest Income rose 2% to ₹13,745 crore, and Net Interest Margin stayed steady at 3.73%. Asset quality improved — Gross NPAs dropped to 1.46% and Net NPAs to 0.44%.
The fall in profit was mainly because of a one-time provision of ₹1,231 crore for discontinued crop loan products, which is expected to be reversed by FY28. Investors appreciated this transparency and focused on the bank’s improving fundamentals.
Beyond banking, all major sectors — except PSU Banks — joined the rally. The Nifty FMCG index rose 2.02%, Realty by 1.82%, Consumer Durables by 1.53%, Private Banks by 1.32%, and Auto by 1.27%.
This broad-based rally showed that the market’s strength wasn’t limited to one area — it reflected confidence across the economy.
5. RBI’s Role: Supporting the Rupee
The Indian rupee also played its part. It strengthened slightly from ₹88.06 to ₹87.93 per dollar, despite global dollar strength. The Reserve Bank of India (RBI) reportedly sold $3–5 billion (₹263–₹395 billion) in spot and forward markets — one of its largest interventions in months.
This move discouraged traders from shorting the rupee and signaled that the RBI was ready to defend the currency. A stronger rupee helps reduce import costs and makes India more attractive for foreign institutional investors (FIIs), as it reduces currency risk.
This stability further improved investor sentiment during the day’s rally.
6. Crude Oil Prices Drop — A Gift for India
Another silent contributor was the fall in crude oil prices. After Trump’s statement about India and Russia, oil prices first rose but later dropped sharply when India denied the claim. WTI crude settled around ₹4,542 per barrel ($57.50) — a five-month low.
For India, which imports a large part of its oil, this is great news. Lower oil prices mean lower inflation, reduced current account deficit, and better profit margins for companies. It also supports sectors like aviation, logistics, and manufacturing.
Together with a stronger rupee, it created an ideal setup for India’s market rally.
7. Return of Foreign Institutional Investors
Foreign investors had been selling Indian equities for much of 2025 — over ₹2 lakh crore till September. But October showed a positive turnaround.
Between October 7 and 14, FIIs bought more than ₹3,000 crore in the secondary market and ₹7,600 crore in the primary market. This renewed foreign participation acted as a key pillar behind the October 16 rally.
The combination of foreign buying and strong domestic institutional support amplified the momentum across all sectors.
8. Gold Shines Alongside Stocks
Interestingly, while the stock market was booming, gold prices also hit record highs — around ₹1.28 lakh per 10 grams (equivalent to $4,233 per ounce). Normally, gold rises when stocks fall, but this time both went up together.
This shows how global liquidity and rate cut expectations were driving both asset classes. Investors saw both stocks and gold as attractive due to the changing interest rate environment.
9. Technical View: Market Breaks Key Resistance
From a technical angle, the Nifty broke past the key 25,500 resistance level, signaling a strong upward breakout. Analysts noted that fresh long positions were being built in derivatives markets, with momentum pointing towards 25,800–26,000 levels in the short term.
This indicates the rally was supported by technical strength, not just short-term trading activity.
10. What’s Next? Will the Rally Last?
The sustainability of this rally depends on several factors:
The U.S. Fed’s actual rate decisions and continued dovish tone.
The continuation of AI-driven global growth, led by companies like TSMC.
Real progress in U.S.–India trade relations beyond just positive talk.
Continued strong corporate earnings from Indian firms.
The RBI’s management of the rupee and liquidity.
Steady foreign investor inflows.
If these remain supportive, India’s markets could continue their upward journey.
Conclusion
The October 16, 2025 rally was the result of a rare and powerful mix of positive global and domestic factors. From TSMC’s AI-fueled growth to Powell’s dovish signals, from trade optimism to RBI’s currency support, every piece of the puzzle came together to lift Indian equities.
Most importantly, it wasn’t just a one-sector story — it was a broad-based rally across banking, FMCG, real estate, consumer durables, and auto. That shows underlying economic strength and investor faith in India’s resilience.
This rally highlighted how deeply interconnected the world’s markets have become — where a chipmaker in Taiwan, a policy speech in the U.S., and diplomacy between leaders can together move the Indian stock market.
For investors, the message is clear: global developments matter as much as domestic ones. And as long as India maintains its stability, growth prospects, and reform momentum, it will remain a top choice for both Indian and global investors.
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