Dalal Street's festive mood got a foreign push on Friday. The BSE Sensex came within a few points of the 80,000 mark in morning trade, carried by a fifth straight session of buying by foreign institutional investors (FIIs).

The 30-share index opened at 79,413.66 against its previous close of 79,310.01. It dipped to an intraday low of 79,016.05 before buyers took charge and lifted it as much as 734.66 points, or nearly 0.92 per cent, to 79,959.48. The NSE Nifty followed. It opened at 24,538.20 against a previous close of 24,536.60 and rose 136.95 points, or 0.56 per cent, to 24,673.55. By 10:35 am, it had gained 1.17 per cent, or 285.5 points, from its intraday low.

Who is buying and who is selling

The main story is in the money flows. FIIs bought equities worth Rs 14,974 crore, which marks their fifth consecutive session as net buyers. Domestic institutional investors (DIIs) went the other way and booked profits worth Rs 10,444 crore.

That split matters. For much of the recent past, domestic money from mutual funds and SIP inflows has supported Indian equities whenever foreign investors pulled out. Now the roles have reversed for the moment. Foreign investors are buying and domestic institutions are using the strength to take profits. Even after DII selling, the net institutional inflow was roughly Rs 4,530 crore. That explains why the indices kept rising.

Market experts said the rally has solid backing. In their view, it is supported by earnings growth that has come in better than expected. It is also concentrated in large-cap stocks, which had become attractively valued after the earlier correction.

"Note that yesterday while the Sensex rallied 2.6 per cent, the Smallcap 100 index crawled by a measly 0.67 per cent. It is evident where money is going. For financials, tech and auto stocks there is more upside," they added.

A selective rally

Sector data confirms that the gains are uneven. Information technology stocks led the market, and the Nifty IT index rose 1.32 per cent despite a global tech selloff. Private banks also saw strong buying, lifting the Nifty Private Bank index by 0.72 per cent. Consumer durables, financial services and pharma indices gained up to 0.38 per cent. Auto and healthcare stocks traded slightly higher.

Other sectors fell. The Nifty Metal index was down more than 1 per cent. Nifty Chemicals lost 1.34 per cent and Nifty Realty slipped 1.26 per cent.

For retail investors, the message is to look past the headline index. The Sensex is close to a milestone, but the rally is driven by valuation-led buying in heavyweight stocks. Large parts of the broader market, especially small-caps, metals and real estate, are not sharing in it.

Whether the Sensex closes above 80,000 in the coming sessions will likely depend on two things. First, foreign investors need to keep buying. Second, the earnings momentum experts point to needs to hold through the rest of the results season. For now, foreign investors are favouring India's biggest companies.

(With inputs from IANS)