Sensex gained nearly 800 points to 77,786, while Nifty 50 jumped over 200 points to 24,259, as of 12:15 pm. The sharp gains added nearly Rs 2 lakh crore to the total market capitalisation of all companies listed on BSE, pulling it up to Rs 478 lakh crore.
IndiGo and Maruti Suzuki shares soared nearly 5% each to lead gains on the Sensex. While M&M, ICICI Bank, L&T, SBI, Hindustan Unilever (HUL), Kotak Mahindra Bank, HDFC Bank and UltraTech Cement shares gained 1-4%. Bucking the trend, Titan and Tech Mahindra shares dropped over 1% each.
This comes as India VIX, which measures volatility in the market, dropped 3.5% to 12.92. Broader markets, however, failed to hold on to the momentum. Nifty Smallcap 200 slipped into the red, while Nifty Midcap 100 traded with marginal gains.
Sectorally, Nifty Auto surged 3% to lead the gains, while Nifty Realty advanced nearly 2% and Nifty Private Bank rose over 1%. Despite the strong benchmark rally, market breadth remained weak, with 1,705 stocks declining against 1,421 advancing on the NSE, while 102 stocks were unchanged.
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Here are the key factors boosting market sentiment today:
1) Oil prices fall to pre-Iran war levels
Oil prices fell to pre-Iran war levels as stranded tankers exited the Strait of Hormuz following an initial peace deal between the US and Iran. Brent crude dropped 1.7% to $72.5 a barrel, easing concerns about growth and inflation outlook in the world’s third-largest oil importer and consumer. This comes after oil prices soared to as high at $120 per barrel earlier this year, and remained above $100 per barrel for most of the time since the war in the Middle East broke out at the end of February, effectively shutting the Strait of Hormuz, a narrow 33-kilometre waterway connecting the Persian Gulf with the Gulf of Oman that handles over 20% of the world’s daily oil and gas shipments.
2) Rupee relief
The rupee rose as much as 0.5% on Thursday to touch 94.16 against the US dollar, its strongest level since early May. This comes amid a sharp drop in oil prices, and policymakers’ steps help shore up dollar inflows
The currency had tumbled to a record low of 96.96 last month before staging a recovery. “The absence of aggressive FII selling in recent sessions has helped keep the currency stable around current levels. However, a stronger Dollar Index above 101 continues to cap gains and keep pressure on emerging market currencies, including the rupee. Going ahead, the rupee is expected to trade in the 94.40–95.00 range, with dollar movement and foreign fund flows remaining the key triggers,” said Jateen Trivedi, VP Research Analyst – Commodity and Currency, LKP Securities.
3) Strong global cues
The sharp rally on Dalal Street mirrored gains across Asian markets. Japan’s Nikkei and South Korea’s Kospi advanced about 5% each, while China’s Shanghai Composite ended marginally higher.
Although Wall Street closed lower overnight, Dow Jones futures were trading in positive territory, signaling a potentially stronger start for U.S. equities later in the day.
What lies ahead?
From the market perspective, the sharp drop in oil prices is a strong bullish factor, said Vijayakumar. “he negative factor continues to be the deficient monsoon. The sectors that will be negatively impacted by deficient monsoon like tractors and agro-machinery, fertilisers and crop-protection products, FMCG and entry level two-wheelers dependent significantly on rural demand, will be impacted by deficient monsoon. On the contrary, premium consumption including FMCG whose demand primarily comes from urban areas, luxury consumption including high-priced automobiles, IT and export-oriented segments will not be impacted by deficient monsoon. Pharmaceuticals with inelastic demand is, normally, an out-performer during deficient monsoons,” he added.
The analyst highlighted that the excessive volatility in the South Korean market continues with 10% crash in one day and 5% up move on another day. The huge profitability of the semiconductor companies is attracting buyers on declines despite the concentration risks in this investment, he said, adding that FII flows will be influenced by this trend.
Technical view on Nifty
Technically, the undertone remains positive as long as the Nifty sustains above the 24,000 mark, according to Rajesh Palviya, Head of Research at Axis Direct. He said that immediate support is placed at 23,900, followed by 23,790–23,750 if profit booking intensifies.
“On the upside, the 24,090–24,150 zone remains the key resistance, and a decisive breakout above this supply area could trigger fresh short covering, paving the way towards 24,300. While supportive global cues and lower crude prices favour further gains, traders should remain watchful of expiry-related volatility and evolving global monetary policy expectations,” according to the analyst.
(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)