Markets recover despite US-Iran tensions; IT stocks under pressure

At 9:40 am, the BSE Sensex was up 516.15 points, or 0.67%, at 77,019.75, while the NSE Nifty50 gained 139.90 points, or 0.59%, to 24,021.95.

In Short

• Markets opened higher, recovering losses from last session
• Broad-based recovery led by financials and broader markets
• Crude oil prices remain high, posing inflation and growth risks

Benchmark indices opened higher on Thursday, recovering part of Wednesday's steep losses, as investors bought beaten-down large-cap stocks despite lingering concerns over fresh tensions in the Middle East.

At 9:40 am, the BSE Sensex was up 516.15 points, or 0.67%, at 77,019.75, while the NSE Nifty50 gained 139.90 points, or 0.59%, to 24,021.95.

The recovery follows Wednesday's sharp sell-off, when both benchmark indices tumbled over 2% to record their biggest single-day decline in three months after renewed US-Iran tensions sent crude oil prices sharply higher.

FINANCIALS, BROADER MARKETS LEAD RECOVERY

The rebound was broad-based, with 15 of the 16 sectoral indices trading in the green.

Among broader markets, the Nifty Smallcap 100 rose 1.03%, the Nifty Midcap 50 gained 0.97%, the Nifty Midcap 100 advanced 0.95%, the Nifty MidSmall Financial Services index climbed 0.95%, the Nifty 500 added 0.68%, the Nifty 200 gained 0.64% and the Nifty 100 rose 0.57%. India VIX, the market's fear gauge, declined more than 7%, indicating easing volatility after Wednesday's spike.

Among sectoral indices, Nifty Consumer Durables gained 1.91%, Nifty Realty rose 1.34%, Nifty Private Bank climbed 0.90%, Nifty MidSmall Healthcare added 0.90%, Nifty Chemicals gained 0.83%, Nifty PSU Bank rose 0.77%, Nifty Media advanced 0.75%, Nifty Financial Services 25/50 gained 0.68%, Nifty Pharma rose 0.69%, Nifty Healthcare Index added 0.66%, Nifty FMCG gained 0.62%, Nifty Financial Services Ex-Bank rose 0.59%, Nifty Auto gained 0.55% and Nifty Oil & Gas edged up 0.38%.

The only major laggard remained the Nifty IT index, which slipped 1.46% as investors remained cautious ahead of Tata Consultancy Services' June-quarter earnings due later in the day. Infosys, HCLTech, Tech Mahindra and TCS were among the top losers on the Sensex.

Among gainers, Eternal surged 3.47%, followed by Sun Pharma, Titan, Bharti Airtel, ICICI Bank, Asian Paints, Trent, Larsen & Toubro, HDFC Bank, Power Grid, UltraTech Cement and BEL.

CRUDE REMAINS ELEVATED

The recovery came even as crude oil prices stayed elevated after fresh military action in the Middle East.

Brent crude was trading around $78.86 a barrel, while WTI crude stood at $74.30. Higher oil prices remain a concern for India, the world's third-largest oil importer, as they increase import costs, raise inflation risks and can weigh on economic growth and corporate margins.

The latest tensions flared after the US military launched fresh strikes on Iran to keep the Strait of Hormuz open for shipping, just hours after US President Donald Trump declared that an interim peace agreement with Iran was "over".

WHY ARE MARKETS RISING TODAY?

Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, said the market has started indicating that the geopolitical situation may not worsen as feared.

"Geopolitics has again played spoilsport with the Indian market, which has been slowly strengthening. President Trump's statement that the ceasefire with Iran is over triggered sharp selling in the market shaving off 516 points from the Nifty, which is almost 50% of the recent gains," he said.

According to Vijayakumar, Brent crude near $80 is not yet a major concern.

"Brent at $80 is not a problem. It won't create a balance of payments crisis. The crisis will re-emerge only if the tensions lead to the closure of the Strait of Hormuz again and consequently crude spikes above $100. The present futures do not reflect such a pessimistic scenario," he said.

He added that foreign institutional investors have remained net buyers over the last four trading sessions, purchasing equities worth Rs 3,954 crore, which could continue to support Indian markets if crude prices remain stable.

(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)

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