At 10.25 AM, Sensex jumped over 800 points to 72,401 while Nifty 50 gained over 250 points to trade above the 22,500 level. The sharp gains have added nearly Rs 3 lakh crore to the total market capitalisation of all companies listed on BSE, pulling it up to near Rs 464 lakh crore.
IT stocks led gains on Sensex after TCS’ Q2 results impressed market and OpenAI’s weak earnings boosted sentiment, bucking worries after Trump extended push for a $100,000 fee for H-1B non-immigrant visas. TCS, Infosys, HCL Tech and Tech Mahindra shares jumped up to 5%. ITC, Adani Ports, HDFC Bank, Power Grid, Bajaj Finserv, Tata Steel, Trent, SBI, Maruti Suzuki, Kotak Mahindra Bank and other stocks gained up to 3%.
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Bucking the trend, BEL and Reliance Industries shares fell up to 1%. The overall market breadth turned positive, with NSE seeing 1,223 declines against 1,884 advances, while 80 stocks remained unchanged.
Among the sectors, Nifty IT jumped 3% to lead gains, while Nifty FMCG, Nifty PSU Bank, Nifty Private Bank, Nifty Realty, Nifty Financial Services and several others gained more than 1% each. This came as India VIX, which measures volatility in the market, eased nearly 4%.
Here are the key factors pushing market higher up today:
1) Trump says no strikes on Iran till midterm elections
US President Donald Trump on Thursday said the US will not launch an attack on Iran before the midterm congressional elections in November, adding that the two countries are having “productive” talks about ending the conflict.
“We are having productive discussions with the Islamic Republic of Iran,” Trump wrote in a post on Truth Social. “We will not be attacking Iran at any time prior to the midterm elections to be held in the United States on November 3rd.” The expectations of the Middle East conflict seeing some relief after the recent escalations may have boosted investor sentiment today.
2) Oil prices ease
As a result of Trump’s announcement, Brent crude futures dipped below $103 per barrel and WTI Crude futures traded near $90 per barrel. Oil prices had been inching higher in recent days amid a rise in attacks on ships passing through the Gulf and the Strait of Hormuz, a critical waterway that once accounted for 20% of the world’s global oil shipments.
The latest announcement by Trump eases supply concerns. Investors will now await the outcome of the “productive” talks that Trump hinted at.
Read More: Crude Oil Price: Brent Crude oil dips 1%
3) Strong buying in IT stocks
IT stocks are sharply rising today, with the heavyweight stocks pushing Sensex and Nifty higher up. Tata Consultancy Services (TCS) kickstarted the IT earnings season by reporting a 15% year-on-year (YoY) growth in its consolidated net profit at Rs 13,884 crore for the second quarter. In constant currency terms, revenue rose 0.5% quarter-on-quarter. Operating margin came in at 24%, while net margin stood at 19%.
Additionally, OpenAI told investors that its annualised revenue for September was nearly $50 billion, lower than the figure it had indicated earlier, according to a report by Reuters. OpenAI missing its revenue estimate may have boosted investor confidence for India’s IT stocks which are seen as the ‘anti-AI’ trade by analysts.
4) Rupee gains
Rupee jumped 23 paise to 96.65 against US dollar in early trade on Friday, driven by softening US dollar and a likely intervention by the Reserve Bank of India. “Higher global yields are keeping FII flows cautious, adding pressure on the currency, ” warned Jateen Trivedi, VP Research Analyst of Commodity and Currency, LKP Securities.
With central banks now moving towards a tighter policy stance, the rupee could see a modest pullback if crude prices remain contained, he added, noting that rupee range can be seen between 96.45-97.00.
5) Bond yields cool down
The global bond selloff cooled down slightly, bringing down bond yields down from multi-year highs. The US 30-year bond yield dipped below 5.6%. The yield on the benchmark 10-year notes fell to 5.2%, while those of the two-year notes fell to 4.75%.
The market has been recently seeing pressure from soaring bond yields which typically makes debt markets more attractive to investors, which in turn puts pressure on the emerging equity markets. Bond yields move inversely to bond prices, so soaring yields reflect a sharp selloff in bonds.
6) Technical rebound
Nifty yesterday breached key technical levels to hit a fresh 52-week low, setting the stage for a technical rebound. The 22,050 region for Nifty is within touching distance, bringing 19,000 and 16,700 back in the radar, warned Anand James, Chief Market Strategist, Geojit Investments. But, being at the lower bollinger band, the analyst noted a swing higher is hoped for though, early in the day.
Although short to medium-term technical charts indicate a clear downtrend, with Nifty forming lower tops and bottoms while remaining well below its 20-, 50-, 100-, and 200-day Simple Moving Averages (SMAs), it is currently holding around a multi-year key support zone of 22,000–22,200, said Vaishnavi Jagtap, Senior Research Analyst at Axis Direct.
A positive divergence on the daily Relative Strength Index (RSI) suggests potential for a relief rally and a decisive close above 22,800 could allow bulls to push the market toward 23,000–23,500 levels, the analyst said. Conversely, he believes that a breach below the psychological support of 22,000 risks extending the downward momentum toward 21,500.
What lies ahead for Dalal Street?
While the market is taking a sigh of relief after a sharp crash in the previous session, caution is still warranted. Elevated crude price and high US bond yields may continue to impact the market, warned V K Vijayakumar, Chief Investment Strategist, Geojit Investments. These two strong headwinds have turned the near-term Indian market structure to a strong “sell on rally” structure.
This sustained FII selling spree has emboldened the bears to go short even on fundamentally strong bluechips, weakening the market further, he added, cautioning that the elevated crude prices and high US bond yields can make FIIs continue selling in the near-term, irrespective of the favourable valuations, particularly of the large-caps.
“Stock market history tells us that crises are great opportunities to buy. The ongoing corrective phase of the market has opened up opportunities for patient long-term value investors to accumulate high quality stocks from the market. The risk-reward structure of the market now is highly favourable for medium to long-term investment,” he further said.
Disclaimer: This article has been written by Debaroti Adhikary, who is not a SEBI-registered Research Analyst or an Investment Adviser. Debaroti Adhikary and his/her ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclaimers here.
