Benchmark indices Nifty and Sensex started on a firm footing on May 26, extending their gains for a second straight session as strength in heavyweights and broad-based sectoral momentum buoyed sentiment. The upbeat mood spilt over to the broader markets, which kept pace with the benchmarks in early trade, underscoring the market’s underlying bullish tone.

At about 9:30 am, the Sensex was up 617.05 points or 0.76 percent at 82,338.13, and the Nifty was up 181.30 points or 0.73 percent at 25,034.45. About 2027 shares advanced, 695 shares declined, and 177 shares remained unchanged.

"Today's trade is buoyed by the relief generated from President Trump's decision to extend the deadline on European tariffs rather than implementing them immediately," says Devarsh Vakil, Head of Prime Research at HDFC Securities. Experts note that despite last week’s FII selling, the Indian market remained resilient, buoyed by strong domestic institutional and retail buying, highlighting continued faith in India’s long-term growth story. Easing concerns over rising US bond yields, expectations of a normal monsoon, and falling crude oil prices are also seen supporting market sentiment by keeping inflation risks in check.

All sectoral indices were  in the green on May 26, reflecting broad-based market strength. The Nifty Bank rose 0.71 percent, while Nifty PSU Bank and Nifty Metal gained 0.80 percent and 0.84 percent, respectively. Energy stocks also saw solid traction, with the Nifty Energy index up 0.87 percent. Auto, FMCG, Infra, IT, and Pharma indices posted gains in the range of 0.5 to 0.65 percent. Volatility edged higher, with India VIX climbing 3.36 percent to 17.86.

The broader market represented by the midcap 100 and smallcap 100 indices gained 0.5 and 0.4 percent, respectively. Given the recent rally, the two have managed to pare most of their losses and trade just 1 and 6 percent lower since the beginning of the year. "A significant feature of the Q4 results season is the outperformance of the midcaps which has helped reduce the high valuations of the segment," V K Vijayakumar of Geojit Investments Limited said.

Tata Motors rose by over a percent after US President Donald Trump, who has postponed the imposition of 50 percent tariffs on European Union imports until July 9. Back in April, President Trump had declared a 25 percent tariff on automobile imports into the US. In response to that development, Jaguar Land Rover (JLR), a subsidiary of Tata Motors, temporarily halted shipments to the US for a month. However, the situation evolved when Trump later signed an executive order that allowed some tariff relief.

CV major Ashok Leyland was little changed even as the company reported a 38.4 percent rise in net profit at Rs 1,246 crore in the fourth quarter ended March 31, 2025. This comes after strong revenue growth and robust sales. The company had posted a profit of Rs 900 crore in the fourth quarter last fiscal. A host of brokerages have dished out bullish calls on the stock following the earnings.

Food delivery major Eternal Ltd. - formerly known as Zomato - saw its shares sink nearly 4 percent during the opening session on Monday, May 26, after the internet company is slated to see passive outflows nearing $840 million as global index majors FTSE Russell and MSCI prepare to trim Eternal's weightage in their portfolios, said IIFL Capital Services.

"The Nifty’s inability to sustain levels above 25,200 suggests that the index is undergoing a consolidation phase, with immediate support around 24,500, near its short-term moving average (20-DEMA). A breach below this level could lead to further downside toward 24,100, potentially derailing the prevailing positive trend. On the upside, a decisive breakout above 25,200 could reignite bullish momentum and pave the way toward the 25,600 level," Ajit Mishra, Senior Vice President of Religare Broking, said.

From a technical perspective, the Bank Nifty outlook is getting brighter. A potent reversal candle has emerged on the daily chart, and when paired with the inverse head & shoulders structure, it screams of bullish intent, says Dhupesh Dhameja of Samco Securities. "As long as the index holds above the 54,500 level—right where the 20-day EMA cushions the fall—the bulls are unlikely to throw in the towel. The bears, meanwhile, appear cornered. Every minor rebound was being sold into earlier, but with the bulls now taking charge, those shorting the top found themselves on the wrong foot by the close," he added.

Top gainers on the Nifty included M&M, Power Grid Corp, Hindalco, Tech Mahindra, and Tata Motors. The top losers on the Nifty were Eicher Motors and HDFC Life.