The Indian stock market witnessed strong buying in morning deals on Wednesday, April 1, with the Sensex and the Nifty 50 rising nearly 3% each, mirroring the global trend.
The Sensex jumped over 2,000 points, or 2.8%, to an intraday high of 73,965, while the NSE counterpart Nifty 50 rose by more than 600 points, or 2.7%, to the day’s high of 22,941. The mid and small-cap indices on the BSE surged up to 4%.
Investors earned ₹13 lakh crore as the overall market capitalisation of BSE-listed firms rose to ₹425 lakh crore from ₹412 lakh crore in the previous session.
Why is the Indian stock market rising?
Let’s take a look at 5 key factors behind the rise in the Indian stock market today:
1. Trump signals the US-Iran war nearing its end
Markets are cheering emerging signs of a potential end to the West Asian conflict.
According to reports, US President Donald Trump has said Washington could end its military attacks on Iran within two to three weeks. Tehran, the US President said, did not have to make a deal as a prerequisite for the war to end.
The US-Iran war, which began on 28 February, has driven crude oil prices to multi-year highs, raising concerns about its impact on global growth and inflation dynamics and dealing a blow to market sentiment.
“There are indications of de-escalation of the war from the statements issued by the Iranian authorities. The Iranian president’s openness to ending the war and the Iranian foreign minister’s confirmation that ‘messages were exchanged with the U.S.’ indicate that the war might end soon. The market might start discounting de-escalation earlier than the event,” VK Vijayakumar, Chief Investment Strategist, Geojit Investments, noted.
2. Positive global cues
Positive global stock market sentiment spilt into the domestic market sentiment. Among the Asian peers, Korea’s Kospi surged more than 7%. Other markets, such as Japan’s Nikkei and Taiwan’s market, jumped 4% amid easing geopolitical risks and better-than-expected March macroeconomic data.
Overnight, Nasdaq surged 4% while the S&P 500 jumped 3% on hopes of an end to the US-Iran conflict.
3. Dollar, bond yields drop
The US dollar index fell below 100, while the US 10-year bond yield eased further to 4.293%. A decline in the dollar and bond yields is positive for emerging markets like India as it improves the prospects of foreign capital inflows.
4. Attractive market valuation prompts value buying
The Nifty 50 crashed 11.3% in March, extending losses to the fourth consecutive month. The sharp decline in the index has brought valuations near the long-term average, offering many blue-chip stocks at an attractive price.
With market sentiment improvement amid positive signals on the front of the West Asian conflict, investors appear to be engaged in value buying to reap the benefits of a potential market uptrend ahead.
5. Technical factor
The Nifty 50 breached a crucial resistance in the 22,700–22,800 zone and reclaimed the 22,900 mark during the session.
According to Hitesh Tailor, a research analyst at Choice Equity Broking, immediate support for the Nifty is seen in the 22,150–22,200 range, while resistance is placed at 22,700–22,800. The RSI stands at 32.01, indicating near-oversold conditions.
According to Anand James, Chief Market Strategist, Geojit Investments, a break of 22,770 can lead the Nifty 50 to 23,040-23,600.
“Fresh long positions should preferably be initiated only after the Nifty convincingly breaks above and sustains the 24,000 level, which would indicate improved sentiment and the likelihood of a more durable bullish trend,” said Tailor.
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Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
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