Indian equities rallied on Monday, with the Sensex climbing as much as 800 points and the Nifty 50 crossing 24,550, as lower crude oil prices and gains in U.S. stock futures supported sentiment. ITC, the top gainer on both benchmark indices, provided an additional boost after its June-quarter cigarette revenue rose sharply and Jefferies upgraded the stock.
The Nifty 50 traded 182.55 points, or 0.75%, higher at 24,566.15 after rising as much as 0.8% to 24,576.45. The Sensex gained 578.43 points, or 0.74%, to 78,673.07 after climbing as much as 800 points to 78,895.10.
The advance came even as major Asian markets traded lower. South Korea's Kospi plunged 5.50% after trading resumed, Japan's Nikkei 225 declined 1.87% and Australia's ASX 200 slipped 0.33%.
Three factors stood out behind the gains in Indian equities — the decline in crude oil prices after U.S. President Donald Trump called off planned strikes against Iran, gains in U.S. equity futures and ITC's rise following its quarterly earnings and brokerage commentary.
Crude Oil Prices Fall
Lower crude oil prices provided the main support to Indian equities after Trump said on Sunday that he had cancelled planned military strikes against Iran following requests from Tehran and other Middle Eastern countries to hold back while negotiations continued.
Trump said the proposed agreement would provide for the "Immediate, Complete, and Total OPENING OF THE HORMUZ STRAIT" and address what he described as the threat from Iran's nuclear programme.
The announcement reduced some concerns about another disruption to energy supplies passing through the Strait of Hormuz. Brent crude fell $3.52 to $84.41 a barrel, while U.S. West Texas Intermediate declined $3.49 to $81.18.
The decision followed reports late last week that Washington was considering fresh military action against Iran as prospects for a negotiated settlement weakened and crude oil prices rose.
Iran remained cautious about the development. Acting Defence Minister Seyyed Majid Ibn Al-Reza said Tehran continued to take threats against the country seriously, while describing recent comments from its adversaries as part of a "psychological and cognitive warfare campaign", according to a post from Iranian state media on X.
Falling crude prices are supportive for India's trade balance and inflation outlook, according to Devarsh Vakil, head of prime research at HDFC Securities.
"Easing crude oil prices are providing a welcome cushion for India's trade balance and inflation outlook, while healthy progress of the southwest monsoon has further bolstered investor confidence," Vakil said.
U.S. Stock Futures Rise
Gains in U.S. equity futures also supported Indian markets even as Asian equities declined.
Dow Jones Industrial Average futures rose 200 points, or 0.4%, while S&P 500 futures gained 0.5% and Nasdaq-100 futures advanced 0.8%. Investors shifted some attention towards the July employment report and another busy period of corporate earnings.
The gains followed a positive close on Wall Street on Friday. The Dow Jones Industrial Average rose 276.97 points, or 0.53%, to 52,485.03. The S&P 500 advanced 0.7% to 7,489.72, while the Nasdaq Composite gained 1% to 25,373.85.
Vakil said Indian equities were breaking above near-term resistance levels after several months of consolidation. He said the Nifty had closed above its 200-day exponential moving average and swing-high resistance, strengthening the near-term positive bias.
The next resistance levels are at 24,530, corresponding to the July 7 swing high, and 24,778, around the 200-day simple moving average, according to Vakil.
Rajesh Palviya, head of research at Axis Direct, also said lower crude prices could support the market despite weakness elsewhere in Asia.
"Technically, the market continues to maintain a positive bias as long as the Nifty sustains above the 24,250 support zone," Palviya said. "While subdued Asian cues may limit near-term gains, continued softness in crude oil prices remains a key supportive factor that could help the index gradually move towards the higher end of its trading range."
ITC Leads Sensex, Nifty Gains After Q1 Results
ITC emerged as the top gainer on both the Nifty 50 and Sensex after its June-quarter results showed an 81% year-on-year increase in cigarette revenue and Jefferies upgraded the stock to 'Buy' from 'Hold'.
ITC's cigarette revenue rose to Rs 15,383 crore during the quarter. Total FMCG business revenue increased 53% to Rs 21,866 crore.
The gains came despite weakness in the company's consolidated earnings. Net revenue fell 14.4% year on year to Rs 16,908 crore from Rs 19,761 crore. Ebitda declined 27.9% to Rs 4,514 crore, while profit after tax dropped 27.1% to Rs 3,579 crore.
Ebitda margin contracted to 26.7% from 31.7%, a decline of about 498 basis points. Agri business revenue fell 17% to Rs 8,082 crore.
Brokerages differed on the outlook after the results.
Jefferies upgraded ITC to 'Buy' from 'Hold' and set a target price of Rs 350. The brokerage said cigarette volume resilience was better than expected and that encouraging volume trends could give management room to take further price increases.
Goldman Sachs retained its 'Neutral' rating but cut the target price to Rs 290 from Rs 320, citing a larger-than-expected decline in cigarette Ebit. JPMorgan maintained 'Neutral' and lowered its target to Rs 310 from Rs 325, while Macquarie retained 'Neutral' and cut its target to Rs 300 from Rs 330.
HSBC maintained its 'Hold' rating but raised the target price to Rs 320 from Rs 310. It said cigarette Ebit declined because of a volume correction and weaker realisations and mix, while further tax increases remained an uncertainty.
Broader domestic indicators also provided support. Vakil pointed to strong July vehicle sales across several categories, along with the progress of the southwest monsoon.
Hyundai reported sales of 75,360 units, including domestic sales and exports, while Tata Motors' domestic passenger vehicle sales increased 58% year on year to 62,611 units. Mahindra & Mahindra's total auto sales rose 26% to 1,03,860 vehicles, including exports.
Maruti Suzuki sold 2,41,421 units, with domestic sales reaching 2,00,123 units. Hero MotoCorp's domestic dispatches rose 21.6% to 5,01,403 units, while Royal Enfield's July sales increased 34% year on year to 1,18,232 motorcycles.
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