The Indian stock market snapped a five-session losing streak, with Sensex and Nifty ending in the deep green on Monday as easing tensions between Iran and the US, falling oil prices and other factors boosted market sentiment.
On Monday, Sensex ended at 776 points to 76,836 while Nifty 50 gained over 228 points to 23,996. The sharp gains added nearly Rs 5.10 lakh crore to the total market capitalisation of all companies listed on BSE, pushing it up to Rs 481 lakh crore.
Eternal, IndiGo, Infosys, Bajaj Finance, Asian Paints, M&M, and Bajaj Finserv jumped up to 6% to become the top gainers on the Sensex, while HDFC Bank, Power Grid Corp, and Axis Bank kept a lid on the rally as the three fell up to 0.42% on Monday.
Broader markets also moved to the deep green, with Nifty Midcap 100 and Nifty Smallcap 100 rising up to 1.1% and 1.31%, respectively. India VIX, which measures market volatility, eased nearly 10% to 12.66, reflecting the renewed market optimism.
All sectoral indices ended in the green, with Nifty IT, FMCG, Auto, and Pharma rising up to 2.60%. The overall market breadth was strongly bullish, with BSE seeing 2,780 advances against 1,580 declines, while 198 stocks remained unchanged.
Here are the key factors pushing the market higher today:
1) Iran-US tensions ease
Iran and US paused strikes over the weekend after two weeks of attacks, triggering hopes of a diplomatic solution that would de-escalate the conflict and allow shipping to resume in the Strait of Hormuz. The US ambassador to the United Nations, Mike Waltz, told media outlets that President Donald Trump had decided to pause the country’s attacks to allow more time for diplomacy. Tehran in turn said it would stop its retaliatory attacks on regional neighbours, handing Gulf shipping and the oil industry a respite.
Iran meanwhile said it had made progress in talks with Oman on management of the Strait of Hormuz. The discussions focused on "common principles and operational mechanisms" for ensuring the safe passage of shipping through the strait, Iran's foreign ministry spokesman Esmaeil Baqaei said.
2) Oil prices tumble
As a result of the easing tensions, oil prices sharply plunged. Brent crude futures dropped more than 4% to trade below $93 per barrel while WTI Crude fell to $85 per barrel. This comes after the escalating tensions last week had triggered worries that oil prices may soar back to its high levels seen earlier this year, putting pressure on the stock market.
4) Value buying
The bullish sentiment may have further been supported by some value buying after Indian equities witnessed a sharp drop over the past one week. While the earnings momentum is expected to improve meaningfully only from the second half of FY27, the recovery is contingent on crude prices stabilising and tensions in West Asia easing, Vinod Nair, Head of Research at Geojit Investments, had said after the sharp bear attack last week.
Until oil prices moderate and geopolitical risks subside, India’s market re-rating is likely to be gradual rather than sharp, reinforcing the case for staying invested and accumulating quality businesses rather than remaining on the sidelines, he had explained.
5) Bond yields drop
US Treasury yields dropped from its record highs hit last week, further boosting equity market sentiment. The yield on benchmark US 10-year notes fell to 4.637% while the 30-year bond yield fell to 5.122%. Falling bond yields typically make bonds less attractive to investors, which in turn can lead to some uptrend in markets.
6) AI Edge Could Bring FPIs Back
The correction in chip stocks and concerns surrounding the AI trade have the potential to revive enthusiasm of FPIs in Indian stocks, according to VK Vijayakumar, Chief Investment Strategist at Geojit Investments. He explained that the diversity of stocks available in the Indian market is rare among emerging markets.
“At some point the FPIs will be forced to recognise this and move away from markets dominated by a single stock or two stocks as in Taiwan and South Korea,” he said. Notably, both South Korea’s Kospi and Japan’s Nikkei are trading in the red today.
(With inputs from agencies)
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