The Indian stock market rebounded on Wednesday, with Sensex rising as easing oil prices, strong FII buying and other factors boosted investor sentiment on Dalal Street.
Sensex jumped over 400 points to trade above 78,800, while Nifty 50 rose above the 24,600 level. This came as India VIX, which measures volatility in market, slumped 3% to 11.85.
Bharti Airtel, IndiGo, L&T, M&M and UltraTech Cement shares gained 1-2% to lead gains on Sensex. Bucking the trend, Titan shares declined nearly 1% to lead losses. Broader markets also remained in the green, with Nifty Midcap 100 and Nifty Smallcap 100 indices gaining up to 0.5%.
Among the sectors, Nifty Realty jumped over 1% to lead gains, while Nifty FMCG, Nifty Financial Services and Nifty Private Bank slipped into the red. The overall market breadth turned positive, with NSE seeing 1,935 advances against 488 declines, while 101 stocks remained unchanged.
Here are 8 key factors boosting sentiment on Dalal Street today:
1) Iran-US peace deal hopes
US is hopeful of reaching an agreement with Iran to reopen the strategically vital Strait of Hormuz "today or tomorrow", Treasury Secretary Scott Bessent said on Tuesday, even as another cargo vessel was struck in the waterway, underlining the fragile security situation. Speaking to CNBC, Bessent said, "We are in talks with the Iranians, and I think there is a chance we may have a deal today or tomorrow to open the Strait and move towards a more normalized position in this conflict."
His remarks come a day after US President Donald Trump expressed optimism that the key shipping route could reopen soon, while warning Tehran of severe consequences if diplomacy failed. Qatar, meanwhile, said on Tuesday mediators were making progress in efforts to end the war.
2) Oil prices fall below $80/barrel
As a result of the peace deal hopes, oil prices fell below $80 per barrel. Brent crude futures dropped over 1% to $78 per barrel while WTI Crude futures dropped below $75 per barrel. The oil prices are extending losses this week so far, as investors eye the prospective peace deal to open up the Strait of Hormuz, a critical waterway for global oil shipments.
3) Rupee gains
Rupee jumped 39 paise to 94.89 against the US dollar on Wednesday. This comes amid the sharp fall in oil prices and FII buying. Investors now eye the RBI monetary policy decision. “The steady foreign fund inflows have helped strengthen the domestic currency and supported overall market sentiment…Going forward, the rupee will continue to take direction from crude oil prices, the US Dollar Index, FII flows, and global geopolitical developments,” said Jateen Trivedi, VP Research Analyst - Commodity and Currency, LKP Securities.
This week, the key focus will be on the RBI's monetary policy decision, where the central bank's forward guidance and policy tone will be closely watched for cues on the rupee's outlook, he noted. “Technically, the rupee is expected to trade in the 95.00–95.75 range over the near term,” according to the analyst.
4) FII buying
Foreign investors remained net buyers of Indian equities on Tuesday, net purchasing shares worth Rs 2,446 crore, according to provisional data on NSE. Foreign buyers have now extended their buying streak to a fifth day.
Strong FII buying after a massive selloff earlier this year boosts investor sentiment on Dalal Street.
5) Strong global cues
The optimism on Dalal Street comes amid an overall bullish sentiment in global markets. Wall Street sharply soared on Tuesday, with tech heavy Nasdaq rallying nearly 3% and S&P 500 jumping around 2%. Asian markets also gained sharply on Wednesday, with South Korea’s Kospi jumping over 4% and Japan’s Nikkei rallying over 3%.
China’s Shanghai Composite was up over 1%, while Taiwan Weighted rallied over 3%. Hong Kong’s Hang Seng was also in the green, with marginal gains.
6) Bond yields fall
US Treasury yields dropped, further boosting equity market sentiment. The yield on benchmark US 10-year notes fell to 4.601% while the 30-year bond yield fell to 5.154%. The yield on 2-year notes, which typically moves in step with Fed interest rate move expectations, reduced to 4.187%. Falling bond yields typically make bonds less attractive to investors, which in turn can lead to some uptrend in markets.
7) Strong Q1 earnings season
Nifty companies have delivered a stronger-than-expected start to the first-quarter earnings season, with profits of the 39 index constituents that have reported results so far rising 11% year-on-year, according to domestic brokerage Motilal Oswal.
“The Q1 results declared so far also have surprised a bit on the upside. If this trend sustains, FY 27 earnings growth can be better than initial expectations,” said VK Vijayakumar, Chief Investment Strategist at Geojit Investments.
Strong earnings by heavyweights and the sharp movement in their share prices may also be driving the bullish market sentiment.
8) All eyes on RBI MPC meet outcome
Investors are now awaiting the RBI policy meeting outcome amid global uncertainties and inflation concerns. “Investors are looking for policy measures from the RBI to address these challenges, along with liquidity support for the banking system, which could help sustain market confidence in the near term,” said Vinod Nair, Head of Research, Geojit Investments.
The Indian central bank is expected to keep interest rates unchanged. Governor Sanjay Malhotra’s commentary would be keenly watched.
What lies ahead for Dalal Street?
Tuesday’s weekly expiry, combined with the implementation of the new mechanism for determining F&O closing prices, has led to a distortion in market trends, Vinod Nair from Geojit Investments noted. The significant gap between the 3:30 pm and 3:40 pm closing prices of Nifty stocks and the index, along with the divergence with Sensex, suggests that the new system is not functioning as intended, resulting in heightened price volatility, he added.
The sharp dip in Brent crude to below $80 and record closing in the US markets augur well for the Indian market today, said VK Vijayakumar, Chief Investment Strategist at Geojit Investments. He added that the focus of the market today will be the monetary policy. “The central bank is almost certain to hold the rates in today’s policy since any rate hike now will impact the ongoing growth momentum in the economy. The market will be focused more on the central bank’s stance and its commentary on managing the emerging challenges,” he said.
“The growth resilience in the economy, improving corporate earnings growth and FIIs turning buyers for the sixth day in a row are positives from the market perspective. It appears that the market is poised for a breakout on the upside,” according to the analyst.
Technical view on Nifty
After Nifty’s initial weakness eased on seeing 24,500, a recovery swing began in the second half of the previous session, said Anand James, Chief Market Strategist at Geojit Investments. He noted that this keeps alive the hopes of another leg of upsides that now appears stalled at 24,775, which indeed would be the level to break today.
The downside marker has now been pushed upwards towards the 24,530 region, the analyst added.
(With inputs from agencies)
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
