Sensex opened 414 points higher at 79,530, while the Nifty 50 rose around 150 points at 24,615.95. Today’s gains added Rs 3.9 lakh crore to the total market capitalisation of all companies listed on BSE.
Adani Ports, Reliance Industries, Bajaj Finance, and L&T were among the top gainers on the Sensex, rising by around 1-2% each. IndiGo, ICICI Bank, Hindustan Unilever and TCS were among the top losers.
1) De-escalation reports
The sharp rebound in markets comes amid expectations of possible de-escalation in the war between Iran and the US-Israel. A report by the New York Times said that Iranian intelligence operatives indirectly reached out to the CIA for talks. This came after a US submarine sank an Iranian warship in the Indian Ocean.
However, the report is yet to be confirmed by officials, which acts as a key overhang for markets. US President Donald Trump on Tuesday said that whatever remains of the Iranian leadership had agreed to engage in negotiations, but added, “It’s too late.” He further claimed that Iran’s “air defence, Air Force, Navy and leadership are gone.”
Earlier, Trump said that he expected the conflict to continue for four to five weeks. Tensions had escalated over the weekend after the US and Israel conducted military strikes against Iran, reportedly killing its Supreme Leader, Ayatollah Ali Khamenei. Iran subsequently launched retaliatory attacks across several parts of the oil-rich region.
2) Positive global markets
The expectations of the raging war in the oil-rich region cooling down boosted global markets as well, after a massive selloff. South Korea’s Kospi, which had tumbled 12% earlier yesterday, was up 9% in the morning. Japan’s Nikkei was up nearly 2%, while Hong Kong’s Hang Seng and China’s Shanghai Composite were up nearly 1% each, as seen at 9.10 am IST.
Wall Street ended yesterday’s session higher as well, with tech-heavy Nasdaq gaining more than 1% and S&P 500 rising nearly 1%.
3) Oil reassurances
While oil prices continue to rise due to the closure of the Strait of Hormuz, reassurances to ease the movement of tankers may have boosted investor sentiment. US President Donald Trump said that he has ordered US international Development Finance Corporation (DFC) to provide political risk insurance and financial guarantees for maritime trade in the Gulf at a very “reasonable price”.
The US Navy could begin escorting oil tankers through the Strait of Hormuz if necessary, he further said. His statement came as traffic effectively came to a standstill at the Strait of Hormuz after several tankers passing through the area were bombed. More than 20% of the world’s oil supply passes through the Strait of Hormuz, which connects the Persian Gulf with the Gulf of Oman and the Arabian Sea.
4) Rupee rises
The Indian rupee also opened higher against the US dollar, rising 0.63% to $91.57. This comes a day after the Indian currency declined to 92.16, breaching its previous all-time low of 91.9875 per dollar hit in late January.