Sensex gained over 700 points to trade above the 77,350 level, while Nifty rose over 200 points, rising above the 24,100 mark.
Broader markets continued to outperform benchmarks, with Nifty Smallcap 100 and Nifty Midcap 100 indices gaining up to 1.6%, as India VIX, which measures volatility in markets, declined around 5% to 18.76 in the morning.
Sun Pharma shares were the top gainers on Sensex, jumping more than 7% after the company announced $1.2 billion acquisition of US-based Organon. Adani Ports, Kotak Mahindra Bank, Tech Mahindra, Infosys and Tata Steel shares followed, rising 2-3%. Bucking the trend, Axis Bank shares tumbled over 3% after its Q4 results failed to impress markets.
Sectorally, Nifty Metal, Nifty Pharma and Nifty Healthcare jumped 2-3% to emerge as the top gainers. Notably, all sectoral indices are currently in the green. Around 2,513 stocks advanced on NSE, while 519 declined and 80 remained unchanged.
In the current state of total uncertainty, investors can wait and watch the geopolitical developments and take decisions as clarity emerges, said VK Vijayakumar, Chief Investment Strategist at Geojit Investments. “Despite the macro threats emerging from the energy crisis India’s growth momentum is showing resilience and optimism as indicated by the recent rising private capex numbers,” he added.
Despite prevailing caution, markets rebounded today. Here are the key factors driving the renewed optimism.
1) Iran sends peace proposal to US
Iran reportedly gave the United States a new proposal on reopening of the Strait of Hormuz and ending of the war, with nuclear negotiations postponed for a later stage. Citing US officials and two sources, Axios reported that Iranian foreign minister Araghchi made it clear to the Pakistani, Egyptian, Turkish and Qatari mediators over the weekend that there is no consensus inside the Iranian leadership about how to address the US demands.
The new proposal, given to the US via the Pakistani mediators, focuses on solving the crisis over the strait and the US blockade first. As part of that, the ceasefire would be extended for a long period or the parties would agree on a permanent end to the war.
According to the proposal, the nuclear negotiations would only start at a later stage, after the strait was open and the blockade lifted. The White House has received the proposal but it’s unclear whether the US is willing to explore it.
“These are sensitive diplomatic discussions and the US will not negotiate through the press. As the president has said, the United States holds the cards and will only make a deal that puts the American people first, never allowing Iran to have a nuclear weapon,” White House spokesperson Olivia Wales told Axios.
2) Global markets rally
Asian markets mostly traded in the green on Monday morning, with Japan’s Nikkei and South Korea’s Kospi gaining around 2% each to hit fresh record highs. Hong Kong’s Hang Seng and China’s Shanghai Composite traded with marginal gains.
Wall Street indices closed in the deep green on Friday, although Dow Jones futures were in the red on Monday morning. European markets however closed in the red on Friday.
3) Dip buying sparks rebound
After three sessions of sharp decline along with incessant selloff in March, markets may be witnessing some short-covering and value-buying. The Nifty declined by around 3% over the past three sessions, erasing some of the gains made during its rebound wave earlier this month, following an 11% crash in March as the war in the Middle East rattled global markets.
Nifty is still more than 4% lower than its pre-Middle East war levels of near 25,200. Narendra Solanki from Anand Rathi Shares & Stock Brokers highlighted that Nifty has recovered over 2,000 points from the 22,000 range it was trading in March. “The market has recovered smartly and we just entered with that kind of recovery into the result seasons and the markets were hoping for the result season to be largely in line,” he told ET Now.
Bears still hiding behind the bulls?
Despite the renewed optimism, some caution is warranted. Oil prices remained elevated, with Brent crude futures rising more than 1% to trade at $ 106.50 per barrel on Monday morning. After comfortably falling below the $100 per barrel mark earlier this month, oil prices soared back above the crucial level last week as fresh attacks near the Strait of Hormuz spooked investors about supply concerns.
Rupee continued to weaken against the US dollar, falling 11 paise to 94.27 against the American greenback in early trade. “Rupee weakened further on persistent FII outflows amid rising US bond yields. Domestically, the RBI flagging early signs of an economic slowdown, softer forward-looking business confidence, and foreign brokerages’ downgrade on the Indian equity outlook overshadowed an otherwise expansionary PMI reading, said Vinod Nair, Head of Research, Geojit Investments Limited.
Foreign investors remained net sellers of Indian equities on Friday, net selling shares worth around Rs 8,828 crore, according to provisional data on NSE. While this does not reflect their behavior today, strong FII selling typically dampens sentiment.
(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)