Diwali gains often last. Will this year’s Sensex rally hold?

Detailed summary

The Sensex has risen in the week after Muhurat in almost two-thirds of the past 30 years. Earnings and foreign buying will determine whether this year’s rally has further to go

The festivities are over, but Dalal Street has held on to its cheer. The BSE Sensex gained 0.73% in the week after Muhurat trading on 8 November, adding to its strongest pre-Diwali weekly rally in three decades.

The 8.78% surge before Muhurat was the biggest, according to a Mint analysis of Bloomberg data from 1997 to 2026, well above the previous high of 5.4% in 2002. After such a sharp rise, the question is how much further the market can go.

History offers some pointers. The Sensex rose in the week after Muhurat in 19 of the 29 years through 2025, or almost two-thirds of the time. But gains before the festival have not always lasted and analysts say festive sentiment alone cannot sustain this year’s rally.

Rajesh Singla, CEO and fund manager at Alpha AMC, attributed the pre-Muhurat surge to renewed foreign buying, falling crude prices and short covering as traders unwound bets on further declines.

“For it to last, foreign buying must continue in cash equities, crude must stay contained, and Q2 earnings must justify current valuations,” Singla said.

The Sensex gained in the week before Muhurat in 19 of the 30 years analyzed and fell in the remaining 11. Advances ranged from just 0.03% in 2006 to 8.78% this year.

A positive lead-up, however, did not guarantee another week of gains. Of the 19 years with a positive pre-Muhurat week between 1997 and 2026, the Sensex extended its gains in the following week in 13, including this year. In the remaining six, it fell.

Some reversals were sharp. In 2010, the Sensex gained 4.86% before Muhurat but lost 4.04% afterwards. A year earlier, a 4.11% rise was followed by a 2.96% decline. In 2013, the index gave up much of its 2.69% advance with a 2.50% fall.

There were also years when buying continued. In 2001, the Sensex rose 3.29% before Muhurat and another 5.42% afterwards. In 2025, a 1.02% gain was followed by a 2.20% advance.

Opening of the article, excerpted from Mint. To read the rest, open the article on the publisher's site.