Why is market rising today? Sensex soars 600 points, Nifty above 23,900. 6 key factors driving the rally

The Indian stock market snapped a five-session losing streak on Monday, with the Sensex and Nifty opening sharply higher as easing tensions between Iran and the US, falling crude oil prices, and other positive cues lifted investor sentiment.

Sensex jumped over 600 points to the day's high of 76,696, while Nifty 50 gained over 150 points to rise above 23,900. The sharp gains added nearly Rs 4 lakh crore to the total market capitalisation of all companies listed on BSE, lifting it to Rs 479 lakh crore.

IndiGo, Eternal and Asian Paints shares jumped up to 3% to lead gains on the Sensex. In contrast, shares of Infosys, Bajaj Finance, Hindustan Unilever, Tech Mahindra, TCS, ITC, Tata Steel, and Kotak Mahindra Bank rose 1-2% to follow. Bucking the trend, ICICI Bank and UltraTech Cement shares were trading in the red with marginal losses.


Broader markets also traded firmly in the green, with the Nifty Midcap 100 and Nifty Smallcap 100 gaining up to 1% each. Meanwhile, India VIX, the market's volatility gauge, fell more than 3% to 13.55 in early trade, reflecting improving investor sentiment.

Nearly all sectoral indices traded in the green, with Nifty FMCG and Nifty IT rising over 1% each to lead gains. The overall market breadth was strongly bullish, with NSE seeing 2,229 advances against 436 declines, while 91 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.

What lies ahead?

The sharp dip in Brent crude price from $102 four days ago to around $93 this morning is a sentiment positive for the market, Vijayakumar said, adding that if the de-escalation of the West Asia conflict holds and crude price drifts lower, that can sustain a mild rally in the market.

FII flows have been very inconsistent this month, alternating between buying and selling, the analyst, however, noted. He added that the FII may soon shift to India from the AI markets. “This is already happening in a small way, and this trend is likely to gather momentum, going forward. The price of crude and the progress of the monsoon will be the two factors that will influence this trend,” he added.

Technical view on Nifty

The consecutive falls that sent Nifty to a close below the lower Bollinger band on Friday raised the prospects of a mean reversion move, especially with the 20-week SMA at 23,741 providing support, said Anand James, Chief Market Strategist of Geojit Investments.

He however noted that the weekly oscillators are not positioned to support a vertical rise. “Towards this end, we will look for a close above the 23,820-23,955 region, to negate the tendencies towards a plunge to 23,500 or 23,200,” 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)