Indian stock markets continued their positive momentum for the second straight day on May 26, led by strong buying in auto, IT, and metal stocks.

However, after a sharp jump of nearly 600 points during the day, some profit booking was seen at higher levels.

By the end of the day, the Sensex closed 455 points higher at 82,176, while the Nifty reclaimed the 25,000 mark, ending 148 points higher at 25,001.

More than 2,200 stocks advanced on the NSE, while about 1,700 declined, showing a broadly positive market breadth.

What helped the rally?

Investor confidence got a boost from two major developments:

India became the fourth-largest economy in the world, according to recent global rankings.
The RBI announced a record dividend payout, which is likely to reduce the government’s fiscal pressure.

Experts believe this could help the government meet its FY26 fiscal deficit target of 4.4%, which is good news for the overall economy and markets.

What experts are saying

V K Vijayakumar from Geojit Financial Services said,

“India’s economic rise and the RBI’s dividend windfall strengthen the macro environment. This supports low inflation and a downward interest rate trend—both good for equities.”

However, he also warned that geopolitical tensions and trade risks from the US could lead to sudden market swings.

Sectors that led the gains

Auto and IT stocks were the top performers, each gaining over 1%.
Other sectors like realty, metals, FMCG, consumer durables, and energy also did well.
Banking stocks saw only mild gains. Nifty Bank was up 0.16% while PSU Bank rose 0.13%.

Midcap and Smallcap action

In the broader markets:

The Nifty Midcap 100 index rose 0.7%
The Nifty Smallcap 100 gained 0.4%

Key stock movements

Eternal Ltd (formerly Zomato) fell nearly 5% after reports said global index providers like MSCI and FTSE might reduce its weightage, possibly triggering $840 million in passive outflows.
Tata Motors rose 1.5% after the US postponed a high import tariff on EU goods. This brought relief for Jaguar Land Rover, its UK-based subsidiary.
Balkrishna Industries (BKT) tanked over 6% after its March quarter net profit fell 25% YoY. Nomura downgraded the stock to ‘neutral’, citing high expenses and pressure on profit margins.

What’s next for the markets?

Technical analysts say:

Nifty has resistance near 25,150–25,500
Sensex may face resistance near 82,700–83,600
On the lower side, Nifty has support at 24,600, while Sensex has support near 80,900