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The Indian stock market benchmarks- the Sensex and the Nifty 50- jumped higher by more than 1% each on Wednesday, 6 May, amid reports that the US and Iran were nearing a deal to end their conflict.
The Sensex jumped more than 1,000 points, or over 1%, to an intraday high of 78,022.78, while the Nifty 50 touched the day's high of 24,356.50 during the session.
Paring some gains, the 30-share pack ended at 77,958.52, up 941 points, or 1.22%, while the Nifty 50 settled at 24,330.95, rising 298 points, or 1.24%.
The broad-based buying interest lifted the mid and small-cap segments also. The BSE 150 Midcap index jumped 1.67%, while the BSE 250 Smallcap index surged 1.77%.
InterGlobe Aviation (IndiGo), Tata Motors Passenger Vehicles, and Shriram Finance were the top gainers in the Nifty 50 index, which saw 35 of its components ending in the green.
However, ONGC, Reliance Industries, and Power Grid Corporation of India ended as the top losers in the Nifty 50 index.
Investors earned about ₹6 lakh crore as the overall market capitalisation of BSE-listed firms jumped to ₹473 lakh crore from below ₹467 lakh crore in the previous session.
Let's take a look at key factors behind the rise in the stock market:
According to reports, the US and Iran are close to ending their conflict, which has driven energy prices sharply higher, rattling investor sentiment globally and fuelling concerns about its impact on global growth and the inflation trajectory.
As per news agency Reuters, Axios reported that the US believes it is "getting close to an agreement with Iran on a one-page memorandum of understanding to end the war and set a framework for more detailed nuclear negotiations."
Earlier, President Donald Trump signalled there was "great progress" towards ending the conflict.
"Domestic markets rallied on a risk-on sentiment, driven by easing US–Iran tensions and China’s diplomatic engagement, which helped contain crude prices, though the trend remains headline-sensitive," said Vinod Nair, Head of Research, Geojit Investments.
Brent Crude prices crashed 6% to trade near $103 per barrel amid news flows suggesting the Middle East conflict was near its end, which may lead to the reopening of the Strait of Hormuz, a critical waterway for energy supplies through which almost 20% of global energy supply takes place.
The market rallied amid short covering across the segment, driven by a fall in crude oil prices and easing geopolitical concerns.
Bank, auto, financial services, pharma, and realty indices jumped more than 2% each, while metal, IT, and consumer durables rose up to 1%.
"Gains across financials, pharma, auto, and realty were partly led by short covering and tactical moves. With input cost pressures and forex risks still present, a selective investment approach is advisable," said Nair.
The Indian rupee climbed 0.7% to its one-week high of 94.5975 per dollar in intraday trade on Wednesday amid falling crude oil prices and improving sentiment.More to come…
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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