Sensex jumped around 960 points to 75,165, while Nifty 50 gained 271 points to 23,273 on Friday morning. The sharp gains added more than Rs 6 lakh crore to the total market capitalisation of all companies listed on BSE, pulling it up to Rs 432 lakh crore.
Tech Mahindra, State Bank of India (SBI), Tata Steel, HCLTech, Infosys and Power Grid were among the top gainers on Sensex, rising 2-3%. HDFC Bank shares however were the only losers, falling more than 1% and extending losses after the sharp selloff seen yesterday following the sudden resignation of its Chairman Atanu Chakraborty.
All sectoral indices on NSE opened in the green, with Nifty IT and Nifty Metal rising nearly 2% each. 2,3030 stocks advanced on NSE, while 257 declined and 53 remained unchanged.
Why is the stock market rising today? Top factors
1) Crude impact
After shooting up over $110 per barrel mark yesterday, the rally in oil prices cooled down slightly today. Brent crude futures declined more than 1% to trade at $107 per barrel on Friday morning. This came as leading European nations and Japan offered to join efforts to secure safe passage for ships through the Strait of Hormuz and the US outlined moves to boost oil supply. Rising expectations of the war between Iran and the US-Israel de-escalating also supported the decline in oil prices.
However, oil prices still remain comfortably above the pre-Middle East war levels, warranting some caution.
2) Value buying
Markets saw a massive bear attack yesterday, when Sensex plunged nearly 2,500 points and Nifty crashed 776 points. The market selloff wiped out nearly Rs 12 lakh crore from the total market capitalisation of all companies listed on BSE. The benchmark indices on Thursday recorded the worst-single day fall since the infamous June 2024 market crash, when they tumbled 6% each following the outcome of Lok Sabha elections.
After the sharp selloff yesterday, investors may have resorted to value-buying today, which in turn may have boosted markets. However, markets have so far only partially recovered the massive losses incurred yesterday.
3) Expectations of easing the Iran-US war
Israel has said it will no longer target energy infrastructure after an attack on an Iranian gas field sparked retaliatory strikes against energy assets across the Middle East. “Israel acted alone,” Prime Minister Benjamin Netanyahu said at a press conference on Thursday, after Israeli officials previously said they had informed the US about the attack.
US President Donald Trump said he had urged Israeli Prime Minister Benjamin Netanyahu not to repeat attacks on Iranian energy infrastructure. All these developments may have boosted hopes for the raging war between Iran and US-Israel to de-escalate, after weeks of rising hostilities in the oil-rich Middle East rattled global markets.
Despite the optimism in the markets, multiple headwinds are keeping investors on the edge as bears may simply be hiding behind the bulls.
Rupee hits a fresh lifetime low
Indian rupee sharply declined to a fresh all-time low, falling to 92.92 against the US dollar. This comes as the Indian currency continues its free fall amid global energy crisis driven by the prolonged war between Iran and US-Israel. “The macro backdrop remains unfavorable, with crude likely to stay elevated for a prolonged period, keeping the rupee under pressure,” said Jateen Trivedi, VP Research Analyst – Commodity and Currency at LKP Securities.
In the near term, the rupee is expected to trade within a weak range of 92.25–92.95 against the US dollar, the analyst added.
FII selling continues for the 15th day
Despite the mild optimism in the markets, persistent selling by foreign investors will continue to act as a headwind. FIIs continued to offload Indian equities, selling shares worth Rs 7,558 crore on Thursday — marking their 15th consecutive session of net selling.
While this does not reflect today’s activity, sustained outflows in recent sessions have weighed on investor sentiment.
US bond yield soars
A rout in global bonds pushed yields to multi-month highs on Thursday, though the selloff abated in Asia on Friday. The yield on the two-year U.S. Treasury note, which typically reflects near-term rate expectations, had jumped as much as over 20 basis points in the previous session. The benchmark 10-year yield hit its highest level since late August as well.
What lies ahead?
Indian stock markets have been oscillating between some hope and fear during the last four days, according to VK Vijayakumar, Chief Investment Strategist at Geojit Investments. “The gains which Nifty accumulated in the previous three days have been completely wiped out with the 775 point loss yesterday. This oscillation between hope and fear is likely to continue in the near-term,” he said.
“Today there is potential for the market to move up since hope of de-escalation is back…Even though the uncertainty continues, the market construct is ripe for a bounce back today. Beaten down financials and autos are set for a bounce back,” he added.
Going ahead, markets appear to be in a phase of heightened fragility, where sentiment is being driven by rapidly evolving geopolitical developments and sharp rise in crude prices, said Siddhartha Khemka – Head of Research, Wealth Management, Motilal Oswal Financial Services. “Given the intensifying tensions around energy infrastructure in West Asia, we remain cautious on the market in the near term and expect volatility to persist,” he added.
Technical view
Bajaj Broking saw Nifty 50 finding immediate support around the current week’s low in the 23,000–22,900 zone. A breakdown below this level could trigger further downside, potentially dragging the index toward the 22,700–22,400 range, it said, adding, “This region coincides with a previous gap area and the 78.6% Fibonacci retracement of the earlier major uptrend.”
“Volatility is likely to stay elevated in the near term, influenced by uncertain global cues and ongoing geopolitical tensions, which are weighing on market sentiment. On the upside, yesterday gap zone between 23,618 and 23,378 is expected to act as immediate resistance. The overall bias remains negative as long as the index trades below this zone,” the domestic brokerage 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)