Nifty, Sensex Rally: Why stock market is rising today—Key reasons explained

Nifty, Sensex Rally: Indian benchmark indices opened sharply higher on Thursday, extending gains for the second straight session, as easing concerns around the Middle East conflict, softer oil prices and cooling US bond yields boosted investor sentiment.

The 30-share BSE Sensex rose 554.25 points, or 0.74 per cent, to 75,872.64 at 9:14 am, after opening at 75,732.42 against its previous close of 75,318.39.

The broader Nifty 50 gained 171.05 points, or 0.72 per cent, to 23,830.05. The index opened at the same level compared with its previous close of 23,659.

Market volatility also eased sharply. India VIX, often referred to as the fear gauge of the market, declined more than 4 per cent to 17.85 in early trade.

Realty stocks lead rally

The rally was broad-based, with all sectoral indices on the NSE trading in the green during morning trade. Nifty Realty emerged as the top sectoral gainer, rising over 1 per cent.

Among Sensex stocks, shares of InterGlobe Aviation, Bharat Electronics Limited, Eternal, Power Grid Corporation of India, Asian Paints, Larsen & Toubro and Tata Steel gained up to 3 per cent.

IT heavyweights Infosys and Tata Consultancy Services bucked the broader trend and traded in the red, snapping their recent gaining streak.

The broader market outperformed benchmark indices, with the Nifty Midcap 100 and Nifty Smallcap 100 indices rising up to 0.7 per cent in morning trade.

Iran-US peace deal hopes support markets

Investor sentiment improved after signs emerged that negotiations between the US and Iran may be moving closer towards a possible agreement.

Iran said on Wednesday that it was reviewing a fresh proposal from the US aimed at ending the ongoing conflict in the Middle East. Iranian foreign ministry spokesperson Esmaeil Baqaei said Tehran had received the “points of view” of the American side and was examining them.

US President Donald Trump described the talks as being on the “borderline” between a deal and renewed military strikes.

The comments raised hopes that a diplomatic breakthrough could reduce geopolitical tensions and stabilise global commodity markets.

Oil prices cool off from recent spike

Crude oil prices also cooled sharply overnight after signs of progress in the Iran-US negotiations.

Brent crude and WTI futures dropped nearly 6 per cent on Wednesday before recovering slightly in Thursday morning trade. Brent crude was hovering near $106 per barrel in Asian trading hours.

Lower crude oil prices are generally seen as positive for India, which imports a large share of its oil requirements.

US bond yields retreat

Global sentiment also improved after US Treasury yields retreated from recent highs.

The benchmark US 10-year Treasury yield had climbed to a 16-month high of 4.687 per cent earlier this week, while the 30-year yield crossed 5.1 per cent for the first time since 2007.

However, easing oil prices and a softer US dollar pushed yields lower overnight. The benchmark 10-year yield fell to 4.576 per cent on Wednesday, though it edged slightly higher again on Thursday morning.

Cooling bond yields typically support equity markets as investors move back towards riskier assets such as stocks.

Rupee rebounds sharply

The Indian rupee also recovered strongly after hitting a record closing low in the previous session.

The currency gained 61 paise to trade near 96.25 against the US dollar in early trade after coming close to the 100-mark earlier this week.

The rebound came after the Reserve Bank of India announced a $5 billion dollar/rupee buy-sell swap auction for a three-year tenor, scheduled for May 26.

The central bank said the move was aimed at managing liquidity conditions and supporting the rupee amid heightened volatility in currency markets.

Global markets rally

Global equities also witnessed a sharp rebound overnight.

Asian markets rallied after reports suggested that some vessels had resumed movement through the Strait of Hormuz. South Korea’s Kospi surged nearly 8 per cent, while Japan’s Nikkei and Taiwan’s weighted index climbed around 4 per cent each.

On Wall Street, the S&P 500 gained 1.1 per cent and the Nasdaq Composite rose 1.5 per cent after three consecutive sessions of decline. European markets also ended Wednesday’s session firmly higher.