The Indian stock market sharply surged on Wednesday, with benchmark indices Sensex and Nifty rising more than 1% each, despite a sharp increase in oil prices as US-Iran tensions escalated.
Sensex soared nearly 889 points to close at 77,655 while Nifty gained around 265 points to end the session above 24,250. The sharp gains added over Rs 4 lakh crore to the total market capitalisation of all companies listed on BSE, pulling it up to Rs 483 lakh crore.
Hindustan Unilever (HUL) and Infosys shares were the top gainers on Sensex, jumping 4-5% each. Trent, Tata Steel, L&T shares followed, rising nearly 3% each, while those of Bharti Airtel, HDFC Bank, TCS, HCL Tech, Kotak Mahindra Bank, Eternal and Axis Bank gained 1-2%. Adani Ports however closed 3% lower to lead losses on the benchmark index after its Q1 earnings.
India VIX, which is a measure of volatility in the market, dropped more than 4% to 12.01 despite the renewed uncertainties. Broader markets also traded in deep green, with Nifty Midcap 100 and Nifty Smallcap 100 indices rising up to 1.5%.
Sectorally, Nifty IT and Nifty Metal jumped more than 2.3% each to lead gains, while Nifty FMCG surged around 2%. Bucking the trend, Nifty Realty and Nifty Auto slipped into the red. The overall market breadth turned positive, with the NSE seeing 2,130 advances against 1,183 declines, while 128 stocks remained unchanged.
Here are the 4 key factors pushing the market higher today
1) Global AI selloff continuesIT stocks including Infosys and HCL Tech are among the top gainers on Dalal Street today. A large part of it may have been driven by India’s resilience to the ongoing global AI selloff. South Korea’s Kospi, consisting heavily of chipmakers, crashed around 9% today while Japan’s Nikkei was down over 4%. Taiwan Weighted, meanwhile, dropped over 4%.
This comes as India comparatively has a smaller number of large listed companies directly tied to the AI infrastructure boom, providing it resilience at a time when analysts are questioning whether the massive AI spending by hyperscalers will actually bear fruit in the future, triggering AI bubble worries.
2) Rupee gains
The rupee rose to a near three-week peak on Wednesday, backed by a rally in the stock market and traders trimming bearish positions ahead of the US Federal Reserve’s policy decision later in the day. The Indian currency rose 17 paise to close at 95.65 against the US dollar
“Going forward, the rupee is expected to take cues from crude oil prices, the US Dollar Index, FII flows, and global risk sentiment. Technically, the rupee is likely to trade in the 95.25–95.95 range over the near term,” said Jateen Trivedi, VP Research Analyst of Commodity and Currency at LKP Securities.
3) FII buying
Foreign institutional investors remained net buyers of Indian equities on Tuesday, purchasing shares worth Rs 755 crore, according to provisional data from the NSE. This comes after FIIs heavily sold shares on Dalal Street over the past four sessions.
While this is marginal compared to the previous selloff and does not reflect their activity today, net buying by FIIs often boosts market optimism.
4) Fed likely to keep rates unchanged
The US Federal Reserve is set to announce the outcome of its FOMC meeting today. Markets largely expect the American central bank to keep interest rates unchanged, though the outlook remains clouded by persistent inflation concerns among a growing number of Fed policymakers.
The Fed’s decision will be a crucial indicator against the backdrop of rising inflation worries amid the escalating conflict in the Middle East.
What lies ahead for Dalal Street?
Given India’s diversified market structure, the case for FII inflows is strengthening with the unwinding of crowded AI trades, said Vinod Nair, Head of Research at Geojit Investments. Meanwhile, despite the intraday uptick in crude prices driven by renewed tensions in West Asia, the broader decline in oil prices over the week has eased inflation concerns and reinforced optimism around the growth outlook and reduction in operational costs, he added.
Domestically, while stronger-than-expected IIP data provided the catalyst for a positive start, the renewed risk appetite helped sustain the gains throughout the session, with IT and metal stocks emerging as key beneficiaries, the analyst said. “Attention now shifts to the U.S. Fed’s policy decision due later tonight, with the widely expected pause in rates unlikely to materially impact Indian markets, as it is mostly already priced in,” he further said.
Technical view on Nifty
Nifty 50 has risen after a period of consolidation on the daily timeframe, Rupak De, Senior Technical Analyst at LKP Securities, noted. He highlighted that the index’s RSI has entered a bullish crossover. Besides, the index has been sustaining above the critical 50 EMA.
“On the hourly chart, the index has reclaimed the 200 DMA as well, confirming near-term strength. In the near term, the index is likely to remain strong, with the potential to rise towards 24,450–24,500. On the lower end, support is placed at 24,100. Sentiment may weaken if the index falls below this level, which could lead to a decline towards 23,950,” he said.