Sensex jumps over 900 points; why is the Indian stock market rising today after the Israel-Iran ceasefire? EXPLAINED
Indian stock market saw solid gains in the morning session on Tuesday, June 24, with the Sensex jumping over 900 points and the Nifty 50 reclaiming 25,250 in early deals.
The Sensex opened at 82,534.61 against its previous close of 81,896.79 and surged over 900 points, or more than a per cent, to an intraday high of 82,835.39. The Nifty 50, on the other hand, opened at 25,179.90 against its previous close of 24,971.90 and jumped more than 1 per cent to an intraday high of 25,250.85.
The domestic market witnessed broad buying, as the BSE Midcap and Smallcap indices also jumped by over a per cent.
The overall market capitalisation of BSE-listed firms jumped to nearly ₹452 lakh crore from ₹448 lakh crore in the previous session, making investors richer by about ₹4 lakh crore within the first 5 minutes of the session.
Around 9:20 AM, the Sensex was 916 points, or 1.12 per cent, up at 82,813, while the Nifty 50 was 265 points, or 1.06 per cent, up at 25,237.
Why is the Indian stock market rising today?
Experts highlight the following five key factors behind the sharp buying in the Indian stock market:
1. Trump announces Israel-Iran ceasefire
US President Donald Trump announced on Monday that Israel and Iran had agreed to a complete ceasefire.
“On the assumption that everything works as it should, which it will, I would like to congratulate both Countries, Israel and Iran, on having the Stamina, Courage, and Intelligence to end, what should be called, ‘THE 12 DAY WAR’,” Trump wrote on his Truth Social site.
Trump’s announcement boosted market sentiment globally, making investors rush to buy equities at lower prices after the recent fall.
In Asia, Japan’s Nikkei rose by over a per cent, while Korea’s Kospi jumped 3 per cent.
“The dramatic developments in West Asia culminating in President Trump’s announcement of a ceasefire indicate that the worst of the conflict is over. The sharp reactions in the crude oil and stock markets suggest the geopolitical situation limping back to normalcy,” VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, observed.
2. Oil prices crash
Crude oil prices fell sharply after the Israel-Iran ceasefire, which relieved Indian stock market investors.
Brent Crude crashed nearly 3 per cent to trade below the $70 a barrel mark after hovering near the $80 per barrel mark in the previous session.
Experts had warned that elevated crude oil prices for a prolonged period would be negative for the Indian economy and stock market. So, a crash in crude oil prices has boosted domestic market sentiment.
3. Investors dump safe-haven assets, rush to equities
Easing tensions in the Middle East have removed one of the key headwinds for the market, prompting investors to dump safe-haven assets like gold and the dollar in favour of riskier equities, which are now available at lower prices after the recent downtrend.
MCX Gold dropped over a per cent in morning trade, while the dollar index declined by about half a per cent.
4. Rupee jumps
In early Tuesday trade, the rupee rose 65 paise to 86.13 against the US dollar after crude oil prices crashed.
The rupee’s appreciation against the US dollar boosted market sentiment, as a stronger domestic currency can attract foreign capital and help ease inflationary pressures.
5. Focus shifts to healthy domestic fundamentals
With Israel-Iran tensions easing, investors’ focus is shifting back to market fundamentals. A healthy economic outlook, strong retail investor participation, and anticipation of better corporate earnings are keeping the medium- to long-term outlook for the Indian stock market positive.
Some experts believe the domestic market may see a double-digit growth this year if geopolitical tensions are contained and earnings growth remains healthy.
“While some valuations are elevated, the overall outlook remains positive heading into the second half of the year. If earnings growth stays on track and global headwinds remain contained, a double-digit return for the full year is certainly within reach. The long-term India story remains strong, and we expect continued momentum in sectors aligned with structural growth themes,” Pawan Jain, the founder and chairman of Ashika Group, told Mint.
(This is a developing story. Please check back for fresh updates.)
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Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions, as market conditions can change rapidly, and circumstances may vary.