- Indian equity markets rose up to 0.8% led by easing crude prices and strong Q2 updates
- Sensex gained 508 points to 72,896 and Nifty stayed above 22,700 on Tuesday
- India VIX fell 7% below 14, indicating reduced near-term market volatility
Indian equity markets extended their sharp recovery on Tuesday, with the Sensex and Nifty rising as much as 0.8%, as easing crude oil prices, strong second-quarter business updates and a moderation in global bond yields improved investor sentiment. The gains marked the second consecutive session of recovery after an extended selloff that had dragged the benchmark indices lower.
The Sensex gained more than 508 points, or 0.70%, to around 72,896, while the Nifty 50 held above the 22,700 mark.
Investor confidence was also reflected in the sharp decline in volatility. India VIX fell 7% to below 14, signalling reduced near-term market anxiety. Broader markets participated in the rally, with the Nifty Midcap 100 and Nifty Smallcap 100 rising as much as 0.8%.
Sectoral performance was also largely positive. Nifty Private Bank and Nifty Oil & Gas gained more than 1% each, leading the advance, while Nifty IT fell more than 1%. Market breadth turned sharply positive, with 2,292 stocks advancing against 1,137 declines on the NSE, while 134 stocks remained unchanged.
The latest recovery comes ahead of the Reserve Bank of India's upcoming monetary policy decision, adding another layer of importance to the market's near-term direction.
Here are three key factors driving the latest market recovery:
Oil Prices Fall Below $100
The sharp decline in crude oil prices has emerged as one of the biggest positives for Indian equities. Despite ongoing tensions in the Middle East, concerns around supply disruptions have eased, pushing Brent crude futures below the psychologically important $100-a-barrel mark. WTI crude futures were trading near $88 a barrel.
According to Reuters data, Gulf oil flows excluding Iran recovered to more than 81% of pre-war levels in September. The recovery was led by an increase in Saudi exports despite attacks on the country's oil infrastructure and escalating Iranian attacks on regional shipping.
At the same time, Iranian oil exports fell to zero amid a US blockade.
Strong Q2 Business Updates Lift Sentiment
Better-than-expected business updates from heavyweight companies provided another major boost to investor confidence.
Trent shares surged 13% after the Zudio parent reported a 23% year-on-year increase in standalone revenue from operations to Rs 5,788 crore for the April-September period of FY27. The revenue performance surpassed market expectations and triggered strong buying interest.
Kotak Mahindra Bank was another major contributor to the market recovery. Its shares gained more than 4% after the private sector lender released its provisional business update for the July-September quarter. The bank reported a nearly 25% year-on-year increase in net advances to Rs 5.77 lakh crore.
Bond Yields Cool After Recent Surge
A moderation in US Treasury yields has also provided relief to global equity markets. The 30-year US Treasury yield stood around 5.6%, while the 10-year yield eased to about 5.28%. The cooling yields come after a sharp rise last week that contributed to the selloff in risk assets, including emerging-market equities.
Higher bond yields can make fixed-income assets more attractive relative to equities while also increasing global borrowing costs. This tends to put pressure on emerging markets such as India by influencing foreign investor flows and valuations.
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