The benchmark indices had slipped into the deep red in the morning trading hours, with Sensex falling more than 800 points and Nifty tumbling below 22,750 as US President Donald Trump’s fresh threats against Iran spooked investors.
But bulls soon took over control of Dalal Street. Sensex and Nifty erased all losses and sharply jumped into the green, before closing near their respective day’s highs. At close, Sensex was up nearly 510 points at 74,616, while Nifty 50 was up more than 155 points, or 0.68%, at 23,124.
Rs 17 lakh crore gain on Dalal Street so far in April!
The sharp gains added nearly Rs 2 lakh crore to the total market capitalisation of all companies listed on BSE, taking it up to Rs 429 lakh crore. Notably, the overall sharp gains recorded in the first four sessions of April have added nearly Rs 17 lakh crore to BSE’s market cap, after the massive March selloff.
IT stocks, including TCS, HCLTech and Infosys, were the top gainers on Sensex, jumping around 3% each. Bharti Airtel, Hindustan Unilever (HUL), Sun Pharma, ICICI Bank and others followed, rising 1-2% each. Bucking the trend, IndiGo, Trent and State Bank of India shares led losses.
India Vix, which measures market volatility, fell more than 3% in the afternoon. Among the sectoral indices on NSE, Nifty IT led gains, jumping over 2.5%. Nifty Metal and Nifty Realty followed, rising around 2% each. 2,082 stocks advanced on the stock exchange, while 1,149 declined and 83 remained unchanged.
Oil prices fall below $110/barrel
The optimism in Dalal Street coincides with a fall in oil prices. After remaining elevated over the $111 mark for most of the morning trading session, Brent crude futures declined around 1% to fall close to $108 per barrel.
Oil prices have seen a skyrocketing rally since the outbreak of the war at the end of February this year. Oil prices crossed the crucial $100 mark in March after the closure of the Strait of Hormuz, marking the first time since Russia’s invasion of Ukraine in 2022, and have sustained over that level since then.
Rupee watch
Rupee rose 0.1% versus the US dollar to 92.98, shored up by unwinding of residual arbitrage positions. The Indian currency recently saw a massive decline, breaching the key psychological mark of 95 last week amid the raging Iran-US war. However, it has recovered some losses since RBI last week stepped up its efforts to support the currency by barring banks from offering rupee non-deliverable forwards to resident and non-resident clients and preventing companies from rebooking cancelled forward contracts.
Rupee’s rise largely reflects a technical pullback and RBI-driven stability, rather than a structural reversal in trend, warned Jateen Trivedi, VP Research Analyst – Commodity and Currency, LKP Securities. “Despite the bounce, underlying pressures from crude prices and global uncertainty continue to persist,” he said, adding that the currency’s support is seen in the 92.45 zone in the near term, while resistance is placed near 93.75–94.
Bears hiding behind the bulls?
Despite the sudden optimism in the markets, some caution is warranted. US President Donald Trump ramped up his threats against Iran, while postponing his plan to unleash “hell” on Tehran for still not completely opening the Strait of Hormuz. He warned that “the entire country of Iran ” could be taken out in one night and that night might be tomorrow night” if Tehran failed to comply.
“Every power plant in Iran will be out of business, burning, exploding and never to be used again,” Trump said, adding that bridges could face “complete demolition by 12 o’clock… over a period of four hours – if we wanted to.” Iran has dismissed the remarks. Meanwhile, fresh Israeli airstrikes were reported in Iran, followed with retaliatory missile fire as the war continues to show no sign of resolution.
Stock markets had rallied yesterday after a report said that Iran and US have received a plan to end their conflict, which can take effect as soon as Monday and lead to the resumption of trade through the Strait of Hormuz. The framework comprising a two-tier approach with an immediate ceasefire followed by a comprehensive agreement was put together by Pakistan, it added.
Bond yields also remain elevated, which are typically considered to redirect global capital flows away from Indian equities. However, they declined slightly during the day and remained more or less flat. The yield on benchmark US 10-year notes fell to 4.331%, while the 30-year bond yield increased to 4.897%. The 2-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, rose to 3.86%.
FII selling streak continues
The massive selling streak of foreign investors continues to weigh on investor sentiment. FIIs remained net sellers of Indian equities for the 24th consecutive session, selling shares worth nearly Rs 8,167 crore on Monday, according to data on NSE. While this does not reflect today’s activity, sustained outflows in recent sessions have weighed on investor sentiment, even as domestic institutional investors remain net buyers.
What lies ahead?
The near-term sentiment remains positive as Nifty has closed higher for four consecutive sessions, said Rupak De, Senior Technical Analyst at LKP Securities. However, uncertainties arising from the Middle East conflict may continue to keep the Indian market volatile, he added.
“The domestic market extended its recovery trend, although the session opened on a weak note amid elevated crude prices and caution ahead of Trump’s deadline for Iran. Gains remained largely confined to IT, FMCG, and metals, while broader market breadth stayed weak, reflecting persistent caution. IT stocks advanced on valuation comfort and support from INR-related benefits, while FMCG gained on positive pre-result commentary from large players,” said Vinod Nair, Head of Research at Geojit Investments.
“Investors are also awaiting the RBI policy decision, with rates widely expected to remain status quo. In the near term, market direction is likely to remain driven by geopolitical developments and selective value buying, with focus gradually shifting to the earnings season for assessing potential downgrade risks arising from higher crude prices and currency volatility,” he added.
Technical view
On the hourly chart, Nifty has given a consolidation breakout, according to De from LKP Securities, who added that the index has moved above the critical moving average on the lower timeframe, confirming a positive near-term outlook. “On the higher end, resistance is placed at 23,200; a decisive move above this level may trigger the next bullish leg towards 23,500–23,800. On the downside, support is placed at 23,000,” he said.
(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)
