Why stock market up today? Nifty50 above 23,900; BSE Sensex rallies over 2,800 points on US-Iran ceasefire – top reasons for rally

Stock market today (AI image)

Stock market today: Buoyed by the two week US-Iran ceasefire, stock markets opened in green on Wednesday, rallying strongly ahead of the RBI monetary policy review. While Nifty50 went above 23,900, BSE Sensex rose over 2,800 points. At 9:56 AM, Nifty50 was trading at 23,932.10, up 808 points or 3.50%. BSE Sensex was at 77,392.85, up 2,776 points or 3.72%.The market rally is supported by a temporary ceasefire between the US and Iran, a sharp decline in oil prices, and other favourable triggers. The gains marked the fifth consecutive session of advances. The sharp upswing added over Rs 12.92 lakh crore to the total market capitalisation of companies listed on the BSE, taking it to around Rs 442 lakh crore.Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited says, “The 2-week ceasefire between the US and Iran has dramatically altered the near-term market scenario. The crash in Brent crude to $95 following the ceasefire will again turn the market bullish. This ceasefire, particularly the agreed reopening of Hormuz Strait, will embolden the bulls to charge again, aided by the fair market valuations.”“RBI, aided by the crash in crude, will opt for a hold in rates today. The policy stance will continue to be neutral. The upside risk to inflation and the downside risk to growth can now be managed well. Rupee will strengthen and this may even force the FPIs to turn buyers; at least they will have to cease the sustained selling, which will become irrational in the present context. Short covering can sustain the rally.in the near-term Nifty will cruise towards 24000 and further movements will depend on the evolving outlook. In brief, it is risk on again. Beaten down financials have the potential to stage a dramatic recovery. Crude-related stocks like refineries, aviation, capital goods companies with exposure to the Gulf region, paints and adhesives will be on strong wicket.”Shares of IndiGo led the rally on the Sensex with a 10% surge. Other major gainers included L&T, Adani Ports, Bajaj Finance, Bajaj Finserv, UltraTech Cement, Maruti Suzuki, Mahindra & Mahindra, Axis Bank, Eternal, and HDFC Bank, which advanced between 5% and 7%. Tech Mahindra was the only stock on the index to trade in negative territory, posting marginal losses.The rally was broad-based, extending beyond large-cap stocks to midcap and smallcap segments. Both the Nifty Midcap 100 and Nifty Smallcap 100 indices rose more than 3%. Market breadth remained strong, with around 2,677 stocks advancing on the NSE, compared to 105 declines and 40 stocks remaining unchanged.

Why is stock market up today? Top reasons

Two-week ceasefire between Iran and the USUS President Donald Trump announced that Washington has agreed to halt military strikes for two weeks and has received a 10-point proposal from Iran, which he described as a workable foundation for negotiations. His remarks brought significant relief to financial markets, especially after earlier warnings that Tehran must reopen the Strait of Hormuz or face severe consequences.“This will be a double sided CEASEFIRE!” he wrote on Truth Social. “The reason for doing so is that we have already met and exceeded all Military objectives, and are very far along with a definitive Agreement concerning Longterm PEACE with Iran, and PEACE in the Middle East,” he added.Oil prices fall below $100 per barrelThe temporary pause in hostilities and Iran’s move to reopen the Strait of Hormuz helped cool the sharp rally in oil prices. Brent crude futures declined more than 13% to $94.98 per barrel, while WTI crude dropped over 15% to $95.95 per barrel as of 9 am IST on Wednesday.Oil had surged past the $100 mark in March following disruptions caused by the closure of the Strait of Hormuz, reaching levels last seen during Russia’s invasion of Ukraine in 2022, and had largely remained above that threshold until the recent pullback.Bond yields easeYields on US government securities declined notably, with the benchmark 10-year yield falling to 4.24% and the 30-year bond yield slipping to 4.84%. The 2-year yield, which generally reflects expectations around Federal Reserve policy rates, also dropped to 3.73%.Higher bond yields are typically seen as diverting global investment flows away from Indian equities. Yields had risen sharply through most of March during the Iran-US conflict before reversing course.Global markets gain momentumGlobal equities moved higher after Iran confirmed the reopening of the Strait of Hormuz under the ceasefire arrangement. Japan’s Nikkei advanced over 5%, while South Korea’s Kospi surged more than 6%. Hong Kong’s Hang Seng climbed nearly 3%, and China’s Shanghai Composite gained around 2%.On Wall Street, the previous session ended largely unchanged, but futures indicate a strong opening ahead. Dow Jones futures were up more than 2% after the key US indices had earlier posted mixed, marginal movements.Rupee rebounds The Indian rupee appreciated by 50 paise to 92.56 against the US dollar in early trade following the ceasefire agreement between the US and Iran. The currency had recently weakened significantly, crossing the key 95 level amid the ongoing conflict, but has since recovered some ground. This comes after the Reserve Bank of India intensified measures to support the rupee by restricting banks from offering rupee non-deliverable forwards to clients and limiting the rebooking of cancelled forward contracts by companies.The rupee’s movement will remain in focus as RBI Governor Sanjay Malhotra announces the outcome of the central bank’s monetary policy committee meeting later today.(Disclaimer: Recommendations and views on the stock market, other asset classes or personal finance management tips given by experts are their own. These opinions do not represent the views of The Times of India)