At close, Sensex was up 185 points at 73,319.55 while Nifty was up 34 points at 22,713. The benchmark indices closed nearly 1,800 points and over 530 points higher than their respective intraday lows.
In the morning trading hours, Trump’s comments suggesting that US can intensify its attacks on Iran in the coming weeks spooked investors. Sensex crashed nearly 1,600 points to hit the day’s low at 71,546, while Nifty 50 declined around 500 points to briefly fall to 22,182. The sharp selloff had wiped off nearly Rs 11 lakh crore from the total market capitalisation of all companies listed on BSE.
However, markets witnessed a sudden, sharp buying interest in the afternoon trading hours, leading to Sensex and Nifty recovering all losses and moving into the green.
IT stocks including HCL Tech, Tech Mahindra, Infosys and TCS were among the top gainers on Sensex, jumping 2-3.5%. HDFC Bank, Bajaj Finance, Maruti Suzuki and Titan followed, rising around 1% each. Asian Paints shares, however, were the top losers, dropping more than 2%, while Eternal, Sun Pharma, NTPC and others followed.
Sectoral watch
The sharp recovery in the markets was led by IT stocks. Nifty IT gained nearly 3% to emerge as the top sectoral gainer on NSE. Nifty Realty rose over 1%. On the other hand, Nifty Pharma and Nifty Consumer Durables declined around 1% each.Broader markets, however, underperformed and closed in the red. Nifty Midcap 100 index fell 0.26% while Nifty Smallcap 100 index declined 0.38%. Around 2,020 stocks advanced on NSE, while 1,216 stocks declined and 75 remained unchanged.
Rupee records sharpest single-day rise in more than 12 years
Indian rupee jumped sharply against the US dollar on Thursday, recording its sharpest single-day rise in more than 12 years, after the Reserve Bank of India (RBI) extended its curbs to offshore derivatives in order to protect the currency from its free fall. Rupee closed 1.8% higher at 93.10 against the American greenback, as against the previous close of 94.83.
This came after the RBI on Wednesday barred banks from offering rupee non-deliverable forwards to resident and non-resident clients. Banks can still offer deliverable FX contracts for hedging, but users cannot offset those trades with positions taken offshore. The measures disrupted a $149 billion-a-day market in what analysts call the toughest measures in over a decade.
Thursday also marks weekly expiry for Sensex, which typically sees heightened volatility during such days.
Oil prices remain elevated
Surprisingly, the sharp recovery in markets came despite oil prices remaining at elevated levels. Brent crude futures surged nearly 7% to trade at $108 per barrel. WTI Crude meanwhile gained around 8% to $108 per barrel on Thursday. Oil prices crossed the crucial $100 mark in March after the closure of the Strait of Hormuz, marking the first time since Russia’s invasion of Ukraine in 2022. Front-month Brent futures hit a record monthly gain of 64% in March, Reuters cited LSEG data dating back to June 1988.
Global markets in red
Indian markets outperformed most of its global peers, which recorded sharp losses. Japan’s Nikkei dropped 3% while South Korea’s Kospi declined around 5%. Chinese markets meanwhile were down around 1%.
Wall Street had ended the previous session in the green, but the future contracts of the indices indicate that the markets may open lower today. Dow Jones futures are currently down more than 1%.
FII selling continues
Indian stock markets have seen relentless selling by foreign investors recently. FIIs remained net sellers of Indian equities for the 22nd consecutive session, selling shares worth nearly Rs 8,331 crore on Wednesday, according to data on NSE. While this does not reflect today’s activity, sustained outflows in recent sessions have weighed on investor sentiment.
What led to the morning crash?
US President Donald Trump’s address to the nation in the morning had retriggered worries about heightened conflict in the Middle East in the near-term. Trump said that US forces will ‘finish the job’ in Iran soon as “core strategic objectives are nearing completion”, and hit the country “extremely hard” within weeks. “We’re now totally independent of the Middle East, and yet we are there to help,” he said. “We don’t have to be there. We don’t need their oil. We don’t need anything they have. But we are there to help our allies,” he added.
He reiterated his claim that Iran’s “navy is gone, their air force is in ruins” and Tehran’s leaders are all dead. He claimed that joint strikes had “obliterated” the Islamic Republic’s nuclear program, and “if we see them make a move, even a move for it, we will hit them with missiles very hard again”. The US President claimed that Iran’s ability to launch missiles and drones have been curtailed.
Trump’s comments suggesting that the US might attempt to wrap up the war within the next two-three weeks may have spurred investor worries about heightened attacks on Iranian power and crude facilities, unless some deal is achieved, said Garima Kapoor Deputy Head of Research and Economist at Elara Capital.
What lies ahead?
Indian equity markets opened on the back foot as Trump’s renewed threat to strike Iran “extremely hard” swiftly erased the optimism built in the prior session, triggering broad-based selling across Asian markets, said Vinod Nair, Head of Research, Geojit Investments.
Rising US Treasury yields, a stronger dollar, and Brent crude reclaiming $108 per barrel revived imported inflation fears, while a four-year low in India’s Manufacturing PMI added a domestic sting to an already pressured market environment, the analyst added. “The RBI’s twin regulatory actions—capping banks’ net open rupee positions and barring NDF offerings to corporates—though disruptive to banking operations in the near term, achieved their intended effect, mechanically forcing dollar unwinding and engineering a meaningful rupee recovery,” he further said.
Markets staged a strong recovery in the latter half of the session, supported by value buying and a sharp appreciation in the rupee, which marked its strongest gain in over 12 years, said Sunny Agrawal, Head of Fundamentally Research at SBI Securities.
A short-covering-driven intraday recovery lacked the depth of genuine conviction, Vijayakumar cautioned. “So long as the Middle East remains a live powder keg, markets will continue to trade on headlines rather than fundamentals, keeping volatility elevated and directional clarity elusive,” he concluded.
(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)