Sensex jumps 1,100 points, Nifty near 24,000: Why is stock market rising today?

The biggest trigger behind today's rally was a potential peace agreement between the United States and Iran. The two countries indicated that an initial deal had been reached to end the conflict and resume shipping through the Strait of Hormuz.

In Short

• Sensex surged over 1,100 points, Nifty neared 24,000 on Monday rally
• US-Iran peace deal eased geopolitical tensions, boosting global markets
• Investors cautious on valuations, watch US-Iran deal and crude price trends

Stock markets witnessed a sharp rally on Monday, with the Sensex soaring over 1,100 points and the Nifty inching closer to the crucial 24,000 mark, as a breakthrough in the US-Iran conflict and a steep fall in crude oil prices boosted investor confidence.

The S&P BSE Sensex surged 1,137.66 points, or 1.51%, to 76,665.61 in early trade, while the NSE Nifty50 climbed 349.75 points, or 1.48%, to 23,972.65.

The rally was broad-based, with strong buying visible across banks, automobiles, real estate, financial services and broader market stocks.

US-IRAN PEACE DEAL BRINGS RELIEF TO MARKETS

The biggest trigger behind today's rally was a potential peace agreement between the United States and Iran. The two countries indicated that an initial deal had been reached to end the conflict and resume shipping through the Strait of Hormuz, reducing fears of a prolonged disruption to global oil supplies.

The easing of geopolitical tensions sparked a strong rally across global markets and triggered a sharp correction in crude oil prices.

Brent crude fell nearly 5% to $83.32 per barrel, while WTI crude plunged over 5% to $80.62 per barrel. For India, which imports the majority of its crude oil requirements, lower oil prices are a major positive as they reduce pressure on inflation, improve the current account balance and support the rupee.

Dr VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, said the sharp fall in crude prices could significantly improve India's macroeconomic outlook.

"With the dawn of peace in West Asia, hopefully, and the consequent sharp correction in Brent crude to below $84 in early trade, the prospects for the Indian economy and stock market have turned for the better. The GDP growth rate and CPI inflation projections for FY27 can be revised in this changed scenario to 6.9% and 4.6% respectively," he said.

He added that a stronger rupee could limit foreign portfolio investor (FPI) selling, while domestic investors, including retail investors and domestic institutional investors (DIIs), are likely to continue supporting the market.

BANKS, AUTO AND REALTY STOCKS LEAD THE RALLY

The market rally was led by financial and consumption-related stocks.

Among Sensex stocks, IndiGo emerged as the biggest gainer, rising 4.44%, followed by Eternal, which climbed 3.84%. Bajaj Finserv gained 3.64%, Bajaj Finance advanced 3.52%, Larsen & Toubro rose 3.12% and Maruti gained 2.88%.

UltraTech Cement climbed 2.65%, M&M added 2.29%, Reliance Industries rose 2.18% and HDFC Bank gained 1.86%. Sun Pharma was among the few laggards, slipping 0.18%.

The sectoral performance reflected the broad-based nature of the rally. Nifty Realty was the top performer, rising 2.42%, followed by Nifty Consumer Durables, which gained 2.35%, and Nifty Auto, which climbed 2.34%.

Nifty Financial Services jumped 2.08%, Nifty Oil & Gas advanced 1.94%, while Nifty Private Bank and Nifty PSU Bank gained 1.02% and 1.43%, respectively.

Vijayakumar said banks could remain in focus as large private banks are witnessing short covering due to attractive valuations.

BROADER MARKETS ALSO JOIN THE RALLY

The optimism was not limited to large-cap stocks. The broader market also saw strong participation, signalling improvement in overall risk appetite.

The Nifty Midcap 100 index climbed 1.47%, while the Nifty Smallcap 100 gained 1.60%. Nifty Midcap 50 rose 1.47%, while the Nifty 500 index advanced 1.67%.

However, analysts remain cautious on valuations. According to Vijayakumar, the Nifty is currently trading at around 20 times earnings, while the Nifty Midcap and Smallcap indices are trading at much higher valuations of around 29 times and 33 times earnings, respectively.

WHAT SHOULD INVESTORS WATCH NEXT?

While the immediate outlook has improved due to easing geopolitical tensions and falling crude prices, investors will continue to monitor the sustainability of the US-Iran agreement, movement in crude oil prices and foreign investment flows.

A stable rupee, improving inflation outlook and continued domestic liquidity could support Indian equities in the near term.

However, expensive valuations in broader markets and the strength of the AI-driven rally in countries such as South Korea and Taiwan could continue to influence foreign investor flows.

(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.)

- Ends