After opening, Sensex gained 900 points to 73,543, while Nifty 50 gained around 266 points into 22,779. The sharp gains at open added nearly Rs 6 lakh crore to the total market capitalisation of all companies listed on BSE, pulling it up to nearly Rs 421 lakh crore.
Asian Paints shares were the top gainers on the Sensex, jumping more than 3% in the morning. IndiGo, Titan, Eternal, L&T, Bharat Electronics (BEL) and others followed, rising in the range of 2-3%. Power Grid and Infosys were the only losers on the index, falling up to 1%.
All sectoral indices on NSE opened in the green, with Nifty Auto and Nifty PSU Bank rising nearly 2% to lead gains. Around 2,318 stocks advanced on the stock exchange, while 226 declined and 58 remained unchanged.
Here are the 4 factors pushing markets higher today:
1) Iran-US ceasefire in sight?
In a post on Truth Social, Trump said that the US and Iran have had very good and productive conversations over the last two days regarding the “complete and total resolution” of the rising hostilities in the Middle East. He added that the talks will continue throughout the week, and the halt in military strikes is subject to the success of the ongoing meetings and discussions.
“I am pleased to report that the United States of America, and the country of Iran, have had, over the last two days, very good and productive conversations regarding a complete and total resolution of our hostilities in the Middle East. Based on the tenor and tone of these in depth, detailed, and constructive conversations, which will continue throughout the week, I have instructed the Department of War to postpone any military strikes against Iranian power plants and energy infrastructure for a five-day period, subject to the success of the ongoing meetings and discussions,” he said.
However, Iran denied talks with the US, and a Wall Street Journal report claimed that Saudi Arabia and the UAE are inching towards joining the fight against Tehran. Additionally, some Iranian gas facilities were hit despite Trump’s announcement, keeping investors on the edge.
2) Brief pause to oil’s rally
After Trump’s announcement late on Monday, oil futures had plunged around 15% to drop below the $100 per barrel mark. However, as investors continued to evaluate Iran’s denial and other negative developments, oil prices shot back up. Brent crude futures were up nearly 4% at $104 per barrel on Tuesday morning.
The sharp rally, which pushed oil prices above the key $100 per barrel level this month for the first time Russia’s invasion of Ukraine in 2022, began after US and Israel’s military strikes killed Iran’s former supreme leader Ayatollah Khamenei. Iran effectively shut the Strait of Hormuz, promising to attack any ship trying to pass through the critical waterway.
While two tankers bound for India sailed through the Strait of Hormuz on Monday, the war continues to disrupt traffic through the waterway, which has halted shipments of about one-fifth of the world’s oil and liquefied natural gas.
3) Rupee opens higher
After hitting fresh lifetime lows for the past consecutive sessions, the rupee regained strength against the US dollar on Tuesday. The Indian currency opened 0.36% up at 93.6375 against the American greenback, as against the previous close of 93.9750.
4) Positive global cues
Trump’s announcement brought much-needed relief to global markets, which have been strongly battered so far in March due to the hostilities in the oil-rich Middle East. South Korea’s Kospi jumped more than 2%, while Hong Kong’s Hang Seng gained around 1.8% on Tuesday morning. Japan’s Nikkei meanwhile, was up around 0.8%.
Wall Street also ended higher yesterday. The Dow Jones Industrial Average and Nasdaq Composite rose around 1.4% each, while S&P 500 gained 1.15%.
Bears hiding behind the bulls?
Despite the optimism in the markets today, some caution is warranted. Persistent selling by foreign investors remains a key headwind for Indian markets. FIIs remained net sellers of Indian equities for the 17th consecutive session on Monday, net selling Indian shares worth Rs 10,414 crore, according to data on NSE. While this does not reflect today’s activity, sustained outflows in recent sessions have weighed on investor sentiment.
US treasury yields rose on Tuesday, after falling sharply overnight. The two-year yield jumped 8 basis points to 3.9136%, while the benchmark 10-year yield was up more than 4 bps. Additionally, despite the brief decline, oil prices remain elevated after the sharp rally.
“Politics is turning out to be as volatile as the market…The market, it appears, is factoring in an end to the war as reflected in the August US oil futures trading at $80. However, in the near-term there will be excessive volatility in response to news regarding the war and events on the war front,” said VK Vijayakumar, Chief Investment Strategist at Geojit Investments.
A major drag on the market now is the huge selling by FIIs despite the sharp correction in the market, the analyst said, explaining that the recent weakness seen in rupee was the main factor behind this sustained selling by FIIs. “Therefore, if some sort of stability is to emerge in the market, the rupee should stabilize first. IT and pharmaceutical segments are likely to remain resilient assisted by rupee depreciation,” he added.
Technical view
Anand James, Chief Market Strategist at Geojit Investments, said that he expects the initial dips in markets to be brief, while waiting for consistent trades above 22,680 to signal strength for Nifty. “We will watch out for 22470, which was defended twice yesterday, to give away before bringing 22200-22000 into the picture. Until then, expect swings on either side of 22560,” he added.