Equity markets gained sharply on Monday as hopes of a US-Iran peace deal pushed crude oil prices lower, boosting investor sentiment. Benchmark indices, the BSE Sensex and Nifty 50, rose 1,074 points (1.42 per cent) and 312 points (1.32 per cent), respectively.
The rally extended to the broader market as well. The BSE MidCap index gained 386 points (0.83 per cent) to close at 46,992.18, while the BSE SmallCap index advanced 696 points (1.33 per cent) to 53,095.80.
Market breadth remained positive for a fifth consecutive session, with 2,785 stocks advancing against 1,535 declining, translating into an advance-decline ratio of 1.81. Investor wealth increased by ₹5.86 lakh crore during the session.
FPIs and DIIs Join Forces
Both foreign portfolio investors (FPIs) and domestic institutional investors (DIIs) were net buyers. FPIs purchased equities worth ₹822 crore on a net basis, while DIIs bought shares worth ₹3,857 crore, according to BSE data.
Vinod Nair, head of research at Geojit Investments, said markets gained momentum on expectations of a US-Iran deal, though global sentiment remains uncertain given the rapidly changing geopolitical situation. He attributed the rally in large-cap stocks to attractive valuations relative to long-term averages, while financial stocks benefited from strong fourth-quarter earnings.
Vikram Kasat, head of advisory at PL Capital, said gains in financials, oil marketing companies, automobile stocks and other interest rate-sensitive sectors lifted market sentiment. A stronger rupee, supportive global cues and expectations of policy stability also aided the rally, he added.
Going forward, Kasat expects market direction to depend on crude oil prices, geopolitical developments, foreign institutional flows and domestic macroeconomic indicators.
“On the macro front, global bond yields softened modestly, while rupee depreciation appears to have stabilised, aided by RBI commentary highlighting that the currency is undervalued. However, it is still early to confirm a sustained trend. The durability of the current momentum will depend on a credible de-escalation of geopolitical tensions and continued stability in crude oil prices,” Nair added.
Technical Breakout
From a technical perspective, Nandish Shah, Deputy Vice-President at HDFC Securities, said the Nifty has decisively crossed the key resistance level of 23,800, resulting in a breakout from its recent consolidation phase. He expects the next resistance levels at 24,370 and 24,600, while 23,800 is likely to act as immediate support.
Sectorally, 23 of the 25 BSE indices ended in positive territory. PSU banks, large banks, private banks and financial services stocks led the gains. Hospitals and FMCG were the only sectors to close marginally lower.
Among individual stocks, major gainers included Bajaj Finance, Larsen & Toubro, HDFC Bank, Eternal and Bajaj Finserv. IT majors Infosys and TCS, along with Hindustan Unilever and Sun Pharma were losers.
