Indian stock markets experienced a significant rebound on Wednesday afternoon, with the Sensex closing 940.73 points or 1.22% higher at 77,958.52 and Nifty 50 gaining 298.15 points or 1.24% to close at 24,330.95. According to latest reports, the rally was triggered by a report suggesting that the US and Iran are nearing a deal to end their month-long Middle East conflict. The sharp gains added nearly ₹6 lakh crore to the total market capitalisation of all companies listed on BSE, pulling it up to ₹473 lakh crore. The market opened on a positive note, tracking supportive global cues and a decline in crude oil prices, after U.S. President Donald Trump signalled progress toward a possible peace deal with Iran. As the session progressed, the market witnessed intermittent profit booking, however, buying in the final hour lifted sentiment, helping the indices close near the day's high.
The White House believes it is getting closer to concluding a one-page memorandum of understanding with Iran to end the month-long conflict, and has set a framework for more detailed nuclear negotiations, as reported by Axios. The US President Donald Trump-led administration is now expecting a response from Iran on several key points in the next 48 hours, with sources indicating this is the closest the two parties have been to an agreement since the war began earlier this year. This development comes after Brent crude prices had soared above $120 per barrel last week as fresh escalations in the conflict between Iran and US spooked investors about the possibility of further prolonged closure of the Strait of Hormuz. With Brent crude falling over 7% on Wednesday, sectors sensitive to fuel costs saw strong gains, with aviation stocks such as InterGlobe Aviation emerging among the top performers on the Nifty 50. US President Donald Trump has suspended "Project Freedom," to escort ships through the Strait of Hormuz, claiming progress in negotiations with Iran towards an agreement to end the war. In a post on Truth Social on Tuesday, Trump said, "Great progress has been made toward a complete and final agreement with representatives of Iran." However, sentiment weakened again overnight after fresh clashes between the US and Iran raised concerns over the durability of the ceasefire and the reopening of the Strait of Hormuz, a critical global oil transit route.
Crude oil prices rebounded sharply after three consecutive sessions of decline, with Brent crude rising over 2 percent to above $102 per barrel in Asian trade, while US crude climbed to around $96.8 a barrel. According to reports, Iran accused the US of violating the month-long ceasefire, while the US described its strikes as retaliatory action after Iranian fire on American naval ships transiting through the Strait of Hormuz. Despite the escalation, US President Donald Trump later said the ceasefire remained in effect. Investors worried that renewed military escalation could prolong supply disruptions in the Middle East. Earlier in the session, Brent had surged more than 3 percent, highlighting the volatile nature of oil prices amid geopolitical tensions. The sharp rise in crude oil prices is a key concern for Indian markets, as India remains one of the world's largest oil importers and any prolonged supply disruptions could significantly impact the economy.
The optimism in the market was broad-based, with all sectoral indices ending in the green except power, FMCG, and energy. Nifty PSU Bank, Nifty Auto, Nifty Media, Nifty Private Bank, Nifty Realty, Nifty Metal, and Nifty Pharma jumped 1-2% each to lead gains, while Nifty FMCG continued to hover in the red. Nifty Bank emerged as the top performer with a 2.63% gain, closing at 55,981.05 points. Nifty Midcap 100 and Nifty Smallcap 100 indices rallied around 2% each, with the Nifty Smallcap 250 and Nifty Midcap 100 surging 1.8%, comfortably outperforming large caps. Nifty MidSmall IT & Telecom index led gains, rising over 3%, followed by the Nifty PSU Bank index, up 2.8%. India VIX, which measures volatility in markets, declined more than 6% to 16.79. Nifty Energy was the worst performer, declining 0.45% to close at 40,806.65 points. More than 160 stocks touched their 52-week high on the BSE, including major names like HFCL, Bank of Maharashtra, Marico, Aditya Birla Capital, SAIL, Natco Pharma, Adani Green Energy, and Nestle India.
Asian equities pulled back from record highs following the renewed tensions, with the MSCI Asia Pacific Index declining 0.9 percent in early trade. US stock-index futures turned flat after initial weakness, while Japanese equities are also expected to open slightly lower after Thursday's record rally. Wall Street ended lower overnight, with the S&P 500 falling 0.38 percent to 7,337.11, the Nasdaq slipping 0.13 percent to 25,806.20, while the Dow Jones Industrial Average declined 0.63 percent to 49,596.97. Back home, institutional flows remained mixed, with Foreign institutional investors continuing to remain net sellers on Thursday, though the pace of selling eased sharply, with outflows of ₹340 crore. Domestic institutional investors remained supportive and bought equities worth ₹441 crore. According to Ponmudi R, CEO of Enrich Money, Indian markets are expected to remain cautious and highly sensitive to geopolitical developments, with the latest exchange of fire between the US and Iran near the Strait of Hormuz reinforcing uncertainty and weakening risk appetite. Aakash Shah from Choice Equity Broking noted that GIFT Nifty indicated a cautious negative start amid renewed Iran-US tensions and mixed Asian markets, though the broader undertone for Nifty remains positive as long as it holds above the crucial 24,200-24,000 support zone.
