Tracking gains in Asian peer markets, domestic equity benchmarks rose by up to 1.89% on Tuesday as investor sentiment improved after US President Donald Trump announced a five-day pause in the war against Iran a day earlier. However, there was significant caution amid market players on the broader trend and foreign institutional investors continued to exit in droves.
The Sensex climbed 1,372.06 points, or 1.89%, to end at 74,068.45, while the Nifty advanced 399.75 points, or 1.78%, to close at 22,912.40. Since the conflict began, the benchmarks have posted gains in seven out of 16 sessions. However, cumulatively, the Sensex and Nifty are still down 8.88% and 9%, respectively, over this period.
The broader markets performed even better, with the BSE Midcap and BSE Smallcap rising 2.42% each.
Investors’ wealth increased by Rs 7.57 lakh crore to Rs 422.78 lakh crore. However, since the onset of the war, investors have lost nearly Rs 48 lakh crore. The India VIX Index declined 7.44% to 24.74, indicating a cooling in market volatility.
Foreign portfolio investors (FPIs) continued their selling streak, offloading shares worth $853.2 million (Rs 8,009.56 crore) on Tuesday, while domestic institutional investors (DIIs) bought shares worth Rs 5,867.15 crore, as per provisional BSE data. So far in March, FPIs have been net sellers to the tune of $11.6 billion (Rs 1.07 lakh crore) — marking record monthly outflows — while DII net buying has reached an all-time high of Rs 1.19 lakh crore.
What do researchers say?
“The domestic market witnessed a relief rally following a temporary pause in attacks on Iran’s energy infrastructure, which could provide some leeway in easing West Asia–related tensions. However, caution persists as investors await greater clarity on developments around the Strait of Hormuz,” said Vinod Nair, Head of Research, Geojit Investments.
The resulting supply chain disruptions are unlikely to have a lasting impact on markets and may be limited to a one- to two-quarter earnings impact, Nair added. Meanwhile, domestic fundamentals remain strong, supported by monetary and fiscal measures expected to drive demand once external uncertainties ease.
“Today’s bounce kindles hopes for a sustained pullback, but follow-through gains are needed to signal a trend reversal,” said Vinay Rajani, Senior Technical Research Analyst at HDFC Securities. The Nifty faces stiff resistance at 23,378, with support seen near 22,600, he added.
Rupee value
The Indian rupee appreciated by 10 paise, or 0.11%, to close at 93.88 against a record closing low of 93.98 in the previous session. Brent crude was trading marginally higher by 3.2% at $103.14 per barrel (as of 6:30 pm IST).
Overall market breadth was positive, with 2,968 gainers against 1,295 losers on the BSE.
All sectoral indices on the BSE and NSE ended in the green. Banking, auto, financial services, consumer durables, and metals were among the top gainers, rising by up to 2.5%.
HDFC Bank contributed nearly one-fifth (275 points or 20%) to the Sensex’s 1,372-point gain, while ICICI Bank, L&T, Bajaj Finance, and Kotak Mahindra Bank together added 501 points, or 36%.
L&T, IndiGo, Eternal, Asian Paints, and Bajaj Finance were the top Sensex gainers, rising by up to 5.19%, while Power Grid and SBI were the only laggards, posting modest declines.
In Asia, Hong Kong led the gains with a 2.79% rise, followed by South Korea, India, China, and Japan. Malaysia and Taiwan were the only markets to end lower.