D-St investors gain Rs 10 lakh cr as Sensex soars 1,200 pts; Nifty closes above 23,300. 3 key factors behind today’s rally

Stock markets surged sharply higher on Wednesday, with the Sensex gaining over 1,200 points and Nifty rising above 23,300. This comes as markets extend their recovery after the massive selloff seen last week and at the beginning of this week.

Sensex zoomed 1,205 points to close at 75,273, while Nifty 50 gained 394 points to 23,306. The sharp gains added more than Rs 8 lakh crore to the total market capitalisation of all companies listed on BSE, pulling it up to nearly Rs 431 lakh crore.

The market optimism was broad-based, with smallcap and midcap indices rallying along with the benchmark indices. Nifty Smallcap 100 index jumped nearly 3%, while Nifty Midcap 100 index jumped more than 2%. This came as India Vix, which measures market volatility, declined over 1%.


Titan, UltraTech Cement, Larsen & Toubro (L&T), Bajaj Finance, IndiGo, Trent, State Bank of India and Mahindra & Mahindra (M&M) were among the top gainers on Sensex, rising 3-5%. IT stocks, including Tech Mahindra and TCS, along with Power Grid, were among the top losers, falling up to 2%.

All sectoral indices on NSE closed in the green. Nifty Consumer Durables jumped nearly 4% to lead gains, while Nifty PSU Bank rose around 3%. Around 2,426 stocks advanced on NSE, while 855 declined and 87 remained unchanged.

Here are the 3 key factors pushing markets higher today:

1) US-Iran war to end soon?

The optimism on Dalal Street comes amid rising expectations of the war between Iran and the US-Israel cooling down. The US President Donald Trump-led administration has sent a 15-point plan and ceasefire proposal to Iran to end the raging war in the Middle East, multiple news agencies reported. The peace plan was shared with Iranian officials on Tuesday via Pakistan, according to the New York Times.

Trump, meanwhile, claimed that Iran has agreed that it will "never have a nuclear weapon", even as fighting in the region continued and Tehran publicly denied that any formal negotiations are underway. "The fact that they are talking to us and they are talking sense. It all starts with: they cannot have a nuclear weapon. They said, what are the top 10? I said, number 1, 2 and 3 is they can't have a nuclear weapon... They have agreed that they will never have a nuclear weapon," he told reporters in the Oval Office on Tuesday.

Trump also claimed victory in the war, stating that US military forces have destroyed Iran’s military capabilities. “Look, their navy's gone, their air force is gone, their communications are gone. Pretty much everything they have is gone," he said. Later, the US President added that Iran had sent what he described as a "very big present" linked to the Strait of Hormuz, calling it a sign that the US was "dealing with the right people".

2) Oil prices fall below $100/barrel

As a result of the rising expectations of the war ending soon, oil prices sharply slipped below the key $100 per barrel mark. Brent crude futures declined nearly 5% to $99 per barrel on Wednesday. This came as investors increasingly hoped for resumption of usual traffic through the Strait of Hormuz if the ceasefire, as claimed by Trump, succeeds.

Notably, the sharp selloff in global stock markets earlier this month tracked the rally in oil prices which was triggered after Iran effectively shut the Strait of Hormuz, promising to attack any ship trying to pass through.

3) Asian markets rally

Dalal Street accompanied Asian peers in the sharp recovery today. Japan’s Nikkei gained nearly 3% on Wednesday, while South Korea’s Kospi rose around 2%. China’s Taiwan Weighted surged nearly 2.5% and Shanghai Composite rose over 1%.

European markets also gained, with UK’s FTSE rising more than 1%, while France’s CAC and Germany’s DAX rose around 1.6%.

Wall Street ended the session in the red yesterday, with tech-heavy Nasdaq declining nearly 1% and S&P 500 falling around 0.4%. European markets were mixed. UK’s FTSE gained over 0.7%, while France’s CAC and Germany’s DAX were almost flat. However, Wall Street futures were in the green on Wednesday, indicating that bulls may regain strength in American markets today.

All is well on Dalal Street?

Despite the optimism, some caution is warranted. Rupee weakened slightly, hovering near record lows and closing 0.1% lower at 93.9775 against the US dollar, as against the previous close of 93.8650. “Despite some positive signals on de-escalation, the currency remains under pressure amid sustained global uncertainty. The rupee is expected to trade in a weak range of 93.25–94.25, with downside bias likely to persist until clear progress in Iran peace talks emerges,” said Jateen Trivedi, VP Research Analyst - Commodity and Currency, LKP Securities.

Persistent selling by foreign investors also remains a key concern. Foreign investors remained net sellers on Indian equities for the 18th consecutive session, net selling shares worth nearly Rs 8,010 crore on Tuesday, according to data on NSE. While this does not reflect today’s activity, sustained outflows in recent sessions have weighed on investor sentiment.

What lies ahead?

Markets continued to build on the previous day’s momentum as global risk sentiment improved, with hopes of peace emerging on the radar, said Vinod Nair, Head of Research at Geojit Investments. “Potential diplomatic progress between the US and Iran—despite mixed geopolitical commentary—led to easing crude oil prices below $100, which was welcomed by the market. Early signs of normalisation in maritime movement through the Strait of Hormuz are likely to further support investor confidence, although it may be early to comment,” he said.

The analyst added that the domestic rally was broad-based, supported by value-driven buying across sectors. “India’s valuation premium, which had remained elevated for some time, has corrected to more reasonable levels, offering investors greater comfort at current market levels,” he further said.

Technical view

Nifty opened with a gap-up for the second consecutive session and maintained its upward momentum throughout the day. However, the index faced stiff resistance around the 23,460-23,465 zone twice on an Intraday basis, which led to a brief throwback towards the last hour of the day, said SBI Securities. “On the daily chart, Nifty has now registered consecutive higher close and formed a strong bullish candle, indicating sustained buying interest right from the opening tick. This optimism appears to be driven by unconfirmed reports suggesting a potential ceasefire agreement between the US and Iran, raising hopes of a near-term de-escalation,” it said.

Going ahead, the brokerage sees Nifty finding immediate resistance in the 23,400-23,450 zone. Any sustainable move above this zone could result in Nifty extending its pullback towards 23,600, followed by 23800 in the short term, it said, adding that on the downside, the zone of 23,150–23,100 zone is likely to act as a strong support.

(With inputs from agencies)

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