Markets roared back to life on Wednesday as bulls charged ahead following the announcement of a two-week ceasefire between the US and Iran. Brent crude futures plunged by $14, or 13%, to $95 per barrel, boosting investor sentiment.
The Reserve Bank of India’s Monetary Policy Committee’s status quo on key interest rates and retained a neutral stance lent further support to the market.
Dual Engine of Growth
The Sensex and Nifty posted their second-highest single-day gains in terms of points, while investor wealth surged by ₹16.25 lakh crore—marking the largest single-day increase on record. With this rally, investors have recouped ₹33.10 lakh crore of the ₹51.09 lakh crore lost since the onset of the West Asia conflict—about 65% of the decline.
Extending gains for the fifth consecutive session, the Sensex soared 2,946.32 points (3.95%) to close at 77,562.90. The Nifty jumped 873.70 points (3.78%) to settle at 23,997.35, just shy of the 24,000 mark. Broader markets also participated, with the BSE Midcap and Smallcap indices rising 4.09% and 3.92%, respectively. Meanwhile, the India VIX dropped 20.23% to 19.70, signaling easing market volatility.
Over the past five sessions, the Sensex and Nifty have gained 7.80% (5,615.35 points) and 7.46% (1,665.95 points), respectively.
Welcoming the ceasefire, Nilesh Shah, MD of Kotak Mahindra AMC, highlighted its significance for India. Key factors include the safety of around 9 million Indians in the Middle East, improved energy availability with the reopening of the Strait of Hormuz, stabilizing energy prices, and steady remittance flows.
“Markets have witnessed a relief rally driven by short covering but will continue to react to events. There could be many slips between the cup and the lip,” Shah cautioned.
Swarup Mohanty, Vice Chairman & CEO of Mirae Asset Investment Managers (India), noted that the de-escalation came when risks were still manageable, triggering a swift rebound, particularly in beaten-down sectors. He added that markets are likely to stabilise as the West Asia situation improves, with focus shifting back to earnings growth and valuations.
Globally, South Korea led the rally with a 6.87% rise, followed by Japan (5.39%), Germany (5.32%), the Eurozone (5.30%), and France (4.89%).
Road to Recovery
Market breadth remained strongly positive, with 3,858 gainers against 536 losers on the BSE. All sectoral indices ended in the green, led by realty, auto, banking, financial services, and consumer durables, each gaining over 5%.
According to provisional BSE data, foreign portfolio investors sold shares worth ₹2,811.97 crore, while domestic institutional investors bought shares worth ₹4,168.17 crore.
Among Sensex stocks, InterGlobe Aviation (IndiGo), L&T, Bajaj Finance, Mahindra & Mahindra, and Axis Bank were top gainers, rising up to 8.22%.
HDFC Bank alone contributed nearly one-fifth (567 points) of the Sensex’s 2,946-point rise. Along with ICICI Bank, L&T, Reliance Industries, and Axis Bank, it accounted for 1,107 points, or 37% of the total gain.
Gaurav Dua, CIO of Standard Chartered Securities (India), observed that recent global uncertainties had overshadowed several domestic positives, including a resilient macroeconomic environment, a bottoming-out of earnings downgrades, and reasonable valuations.
“It is not surprising to see a sharp rebound following positive developments in the US–Iran conflict, especially given oversold market conditions,” he said.
Looking ahead, volatility may persist in the near term. However, the recent correction presents opportunities for investors, Dua added.