All three markets rallied in unison, energised by falling crude prices, expectations of a moderation in domestic inflation and persistent inflows from foreign portfolio investors (FPIs). While the Sensex regained and closed above the 60000 mark after a gap of four months, the rupee gained 20 paise against the dollar to close at 79.44.

Yields on the benchmark 10-year government security that move in opposite direction to their prices fell 10 basis points to close at 7.18 per cent. In the equity markets, the benchmark index rose 417.92 points or 0.70 per cent to settle at 60260.13 — closing above the psychologically key 60000-mark for the first time since April 5 after opening at 59938.05.

The broader NSE Nifty spurted 119 points or 0.67 per cent to finish at 17944.25, marking its seventh straight session of gains.

Some analysts believe the Sensex is on course to touch the record high of 62245.43 scaled on October 19, 2021, with the approaching festival season. But there are others who feel a correction is overdue since the index has galloped over 9000 points in a span of two months from below 51000 levels.

One of the main reasons behind the spurt are expectations that inflation has peaked and central banks will not be aggressive in hiking interest rates. A turnaround shown by foreign portfolio investors (FPIs) has also supported the risk-on sentiment. Participation of FPIs, who made net purchases of around Rs 4,989 crore in July, has jumped this month with net buys of Rs 36,716 crore according to data from NSDL. Thus, their cumulative investments stand at over $5 billion.

“Consistent participation by FIIs is the backbone of the current rally in the domestic market. This reversal in the FII trend is owed to the resilience showcased by the Indian economy even as inflation continues to plague the western markets. Declining commodity and oil prices also instilled confidence in foreign investors,” Vinod Nair, head of research at Geojit Financial Services, said.

Brent crude is trading below the $100 per barrel mark at around $94 a barrel after falling to a day’s low of $91.51. This has been attributed to weak economic data from China that could hurt global fuel demand. However, falling crude prices are good news for India on the inflation front since it imports more than 80 per cent of the requirements. After hitting a six-month low on Wednesday, crude has edged up 1 per cent over a draw-down of US stocks.