- Nifty rose 1.10% to 23,978.20 and Sensex gained 1.19% to 76,278 by 9:25 am
- All sectors traded higher with Auto leading gains at over 2.1%
- Brent crude fell 5.4% to $97.97 amid US-Iran deal progress and easing supply fears
The market is abuzz today, with benchmark indices extending gains to fresh highs, with Nifty rising up to 1.10% or 260 points to 23,978.20 and Sensex advancing 900 points, or 1.19%, to 76,278, as of 9:25 am.
This surge comes against the backdrop of several positive cues, including a cooling crude.
All sectors are in the green, with gains led by Auto, up over 2.1%, followed by Bank, Financial Services, and PSU Bank.
The broader indices are trading positively, with Nifty Smallcap 250 higher by 1.07%, while the Midcap 150 rose 0.86%.
Here are three reasons the markets are gaining today:
Crude Below $100
Oil prices dropped sharply after the US signalled progress toward a potential agreement with Iran that could eventually reopen the Strait of Hormuz, easing fears over prolonged disruptions to global energy supplies. Global benchmark Brent crude fell as much as 5.4% to $97.97 a barrel, while West Texas Intermediate traded below $92. The decline marks Brent's fourth drop in five sessions and puts prices on track for their lowest close in more than a month.
The move came after Donald Trump said negotiations with Iran were progressing, although he cautioned that a final agreement had not yet been completed. “I won't rush into a deal,” Trump said in social media posts, adding that the agreement “isn't even fully negotiated yet.”
Autos, Oil & Gas Leading the Comeback
Petrol and diesel prices have been hiked for the fourth time in just 11 days, as Indian oil marketing companies announcing an average hike of Rs 2.7 per litre on Monday morning. This comes on the back of a Rs 3 per litre hike on May 15, and a 90 paise hike each on May 19 and May 23, taking the cumulative hike to Rs 7.5 per litre.
The price hikes for petrol and diesel prices across India are a desperate measure to help OMCs such as Hindustan Petroleum (HPCL), Bharat Petroleum (BPCL) and Indian Oil Corporation (IOC) to cut back on heavy losses they have been bearing since the start of the Iran War.
According to various analysts, every 50 paise per litre increase in fuel marketing margins is estimated to lift EBITDA by 7% for IOCL, 8% for BPCL and 11% for HPCL. Keeping that in mind, the recent average hike of Rs 2.7 per litre would help these companies save on an additional Rs 113 crore daily. In total, therefore, OMCs, through the four price hikes in 11 days, would be able to cut back on 44% of losses.
Positive Global Cues
Japan's Nikkei 225 climbed over 3% to reach a record high of 65,408.87, while the Topix index gained 1.19%. Taiwan's Taiex also achieved a new all-time high, jumping beyond the 43,000 mark. The index was last trading 2.91% higher at 43,495.92.
Elsewhere in the region, Australia's S&P/ASX 200 advanced 0.45%, China's CSI 300 increased 0.91%, and India's Nifty 50 rose 1.09%. This is after reports suggested the strategically important Strait of Hormuz could reopen soon, boosting investor confidence and improving market sentiment.
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