What’s Driving the Stock Market Surge? Insights on Sensex and Nifty's Rally
Market Rally in Mumbai
Mumbai: In early trading on Wednesday, the benchmark indices of the stock market, Sensex and Nifty, experienced a notable increase, buoyed by a strong rally in global markets and a significant decline in crude oil prices following a two-week ceasefire agreement between the US and Iran.
The BSE Sensex, comprising 30 shares, soared by 2,775.73 points, marking a 3.71% rise to reach 77,392.31. Similarly, the NSE Nifty, which includes 50 shares, surged by 815.2 points or 3.52%, climbing to 23,938.85.
Among the Sensex constituents, InterGlobe Aviation saw the largest increase, nearly 10%. Other notable gainers included Larsen & Toubro, Bajaj Finance, Adani Ports, Bajaj Finserv, and Mahindra & Mahindra.
In contrast, Tech Mahindra was the only stock to lag behind.
Brent crude, the global oil benchmark, fell sharply by 13.24%, settling at USD 94.80 per barrel.
According to Hariprasad K, a Research Analyst and Founder of Livelong Wealth, the primary catalyst for this market movement is the announcement of a two-week pause in US military actions, coupled with Iran's commitment to ensure safe passage through the Strait of Hormuz. This development has alleviated immediate concerns regarding potential disruptions in energy supply, which had been a significant worry for global markets.
He further noted that the reduction in geopolitical tensions has led to a steep decline in global crude oil prices, which is beneficial for India in terms of both inflation and currency stability.
Asian markets also reflected this positive sentiment, with South Korea's Kospi, Japan's Nikkei 225, Shanghai's SSE Composite, and Hong Kong's Hang Seng all trading significantly higher.
On the other hand, US markets closed relatively flat on Tuesday.
VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, commented that the ceasefire between the US and Iran has significantly shifted the near-term market outlook. The drop in Brent crude prices to USD 95 following this agreement is likely to foster a bullish market environment, especially with fair market valuations.
Additionally, investors are keenly awaiting the Monetary Policy Committee's (MPC) decision, led by Reserve Bank Governor Sanjay Malhotra, which is set to be announced at 10 am.
Data from the exchange indicated that Foreign Institutional Investors (FIIs) sold equities worth Rs 8,692.11 crore on Tuesday, while Domestic Institutional Investors (DIIs) purchased stocks valued at Rs 7,979.50 crore.
On the previous day, the Sensex had risen by 509.73 points or 0.69%, closing at 74,616.58, while the Nifty increased by 155.40 points or 0.68%, finishing at 23,123.65.