The Sensex rose around 324 points to open at 75,827, while the Nifty 50 gained more than 84 points to open at 23,493. However, the benchmark indices soon erased most of the gains and were trading nearly flat at 9:20 am.
Zomato-parent Eternal, Bharti Airtel, Mahindra & Mahindra, and Maruti Suzuki were among the top gainers on the Sensex, rising to 1.5%. IT stocks such as Infosys, HCLTech, TCS, and Tech Mahindra, meanwhile, were among the top losers, falling up to 2%.
Nifty Pharma and Nifty Auto were the top sectoral gainers on the NSE, rising around 0.4% each. Nifty IT, however, tumbled 2% despite a Wall Street rally in the previous session. A total of 1,413 stocks advanced, while 1,122 declined and 97 remained unchanged on the NSE.
The war between Iran and the US-Israel has entered its third week, but shows no sign of de-escalation. Israel’s military said it has begun a “wide-scale wave of strikes” across Tehran, minutes after sounding the alarm about the second incoming missile launches from Iran overnight.
Israel’s military added that it was also striking Hezbollah infrastructure in Beirut overnight. Meanwhile, shortly after reopening UAE’s airspace, authorities sent a missile warning alert to people in Dubai. Explosions were heard in Dubai as the military attempted to intercept incoming fire.
Despite the escalating Iran war, the rise in stock markets may have been driven by rising investor optimism over traffic resuming through the Strait of Hormuz after prolonged closure due to Iranian strikes on ships trying to pass through, which had triggered a rally in oil prices and rattled global markets.Some ships have reportedly been able to transit through the critical waterway. US President Donald Trump on Monday said that he has asked seven countries to send warships in order to keep the Strait of Hormuz open.
However, whether these countries have accepted Trump’s demand is yet to be ascertained, keeping investors on the edge. “The prospect of de-escalation remains unclear amid mixed signals from both the U.S. and Iran,” Morgan Stanley said in a daily note to its clients, as quoted by Reuters.
Crude impact
After a brief pause in the ongoing rally, oil prices rebounded on Tuesday. After falling nearly 3% overnight, oil futures are back sharply. Brent crude has gained nearly 3% to trade at $103 per barrel.
European nations have reportedly declined to deploy warships to the Strait of Hormuz, even as Trump warned that NATO could face “a very bad future” if member countries do not help reopen the crucial shipping route.
Global markets
Wall Street ended sharply higher on Monday, fuelled by a rally in AI-linked stocks. A brief drop in crude prices after the U.S. said it would be “fine” with some Iranian, Indian and Chinese ships moving through the Strait of Hormuz also offered some relief to the market. The S&P 500 climbed 1.01% to end the session at 6,699, its strongest one-day gain in over a month. The Nasdaq gained 1.22%, while the Dow Jones Industrial Average rose 0.83%.
Asian markets are currently mostly in the green, with Japan’s Nikkei rising nearly 0.5%, Hong Kong’s Hang Seng gaining around 0.9% and South Korea’s Kospi jumping more than 2.4%, as seen at 9.15 am IST.
European markets ended the previous session higher, with France’s CAC rising over 0.3%, Germany’s DAX gaining 0.5% and UK’s FTSE rising 0.55%.
Currency watch
Indian rupee opened at 92.39 against the US dollar, as against the previous close of 92.42. “Market participants are cautious ahead of the US Federal Reserve’s interest rate decision this week, which could influence global dollar flows and emerging market currencies,” said Jateen Trivedi, VP Research Analyst – Commodity and Currency, LKP Securities.
“Concerns surrounding potential disruptions to oil and gas supplies through the Strait of Hormuz are keeping sentiment fragile. If geopolitical tensions persist and energy prices remain elevated, the rupee may continue to face downside pressure. In the near term, the weak trading range for the rupee is expected between 91.95 and 92.65 against the US dollar,” he added.
FII outflows
Foreign investors remained net sellers of Indian equities for the 12th consecutive session on Monday, net selling shares worth Rs 9,365.52 crore.
While this doesn’t reflect their trading behaviour today, persistent selling by foreign investors seen for the past several sessions dampens investor sentiment.
What lies ahead?
With total uncertainty and confusion regarding the trend of the war continuing, this uncertainty is getting reflected in the market, too, said VK Vijayakumar, Chief Investment Strategist at Geojit Investments. “Even seasoned experts lack conviction to advise investors on the right strategy. All that can be said with conviction now is: remain invested and continue with SIPs,” he said.
“Nifty’s sharp bounce of 257 points yesterday was triggered mainly by short-covering from oversold territory. This bounce back is unlikely to sustain, given the massive selling by FIIs which touched Rs 9366 crores yesterday. In the near-term this FII selling will continue since other markets like the South Korean and Taiwanese markets are giving better returns to FIIs. More importantly, the earnings growth prospects in these markets look much better compared to India’s. In brief, the sustained FII selling is likely to weigh on markets in the near-term,” the analyst added.
Technical view
Nifty 50 has formed a bullish candle with shadows in either direction signaling pullback from the oversold territory after testing the psychological 23,000 levels earlier during the session yesterday, said Bajaj Broking. “Volatility is also expected to remain elevated due to uncertain global cues, rising crude oil prices, and increasing geopolitical tensions, which will keep traders cautious in the near term,” it added.
“Overall bias continues to remain down with immediate resistance placed at 23,700-23,800 levels being the confluence of the last week breakdown area and 8 days EMA. Index need to start forming higher high and higher low on sustained basis to signal a pause in the current downtrend,” the domestic brokerage said.
On the downside, it sees Nifty finding key support in the 22,700–22,400 zone, which coincides with the previous gap area and the 78.6% retracement of the earlier major up move.