The Indian stock market benchmark indices, the Sensex and Nifty 50, extended their rally for the fourth consecutive trading session on Tuesday, as a sharp decline in crude oil prices boosted investor sentiment and risk appetite.
The Sensex surged over 900 points to cross the 76,500 mark, while the Nifty 50 gained more than 1% to move above 23,700. The Bank Nifty index also advanced past the 55,500 level.
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The broader markets participated in the rally, with the Nifty Smallcap 100 and Nifty Midcap 100 indices gaining over half a per cent each.
Sectorally, the Nifty FMCG, Nifty Realty, Nifty Auto and Nifty Private Bank indices traded in positive territory. Meanwhile, the Nifty Metal, Nifty IT and Nifty Pharma indices were among the key laggards.
Over the past four trading sessions, the Sensex has rallied more than 3,400 points, or 4.68%, while the Nifty 50 has gained over 1,000 points, or 4.43%.
Here are three key factors driving the Indian stock market rally today:
1. Fall in crude oil prices
Crude oil prices corrected sharply, with Brent oil slipping below $105 a barrel earlier, after declining 7% in the previous session. Oil prices declined on hopes of an end to the US-Iran war in the Middle East after talks were held between Iran and Qatari mediators.
The decline in oil prices has also supported the Indian rupee, which is currently trading around the 94.70 level.
2. US-Iran Peace Talks
The rebound in the domestic equities has also been supported by hopes of easing geopolitical tensions amid renewed diplomatic efforts by the US and Iran to bring the conflict to an end.
“The progress on the diplomatic front has improved global risk sentiment and eased concerns over potential disruptions to energy supplies,” said Ponmudi R, CEO of Enrich Money.
3. FII Buying
Foreign institutional investors (FPIs) were net buyers in the Indian stock market on Monday. According to BSE data, FPI net infused Rs 3,114.68 crore in domestic equities.
“The foreign institutional investor (FII) flows have shown signs of improvement, providing an additional source of support for domestic equities. Going forward, the sustainability of the recovery will depend on the stability of crude prices, continued foreign investor participation and further progress in diplomatic negotiations,” said Ponmudi R.
Technical Outlook
Nifty 50 extended its recent recovery and reclaimed the 100-day EMA, indicating further improvement in the short-term technical structure.
According to Ponmudi, a sustained move above 23,600 level, supported by continued buying participation, could extend the upward momentum towards 23,800–24,000.
“On the downside, 23,500–23,450 is likely to act as the immediate support zone, coinciding with the opening bullish gap area, followed by the 23,200 mark. Holding above the immediate support zone will be important to sustain the ongoing recovery and maintain positive momentum. The RSI has improved to around 63, indicating strengthening bullish momentum,” said Ponmudi R.
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