Benchmark stock market indices extended their gains in early trade on Monday, with the BSE Sensex surging more than 600 points and the NSE Nifty climbing nearly 160 points, as easing geopolitical tensions, falling crude oil prices and a strong rally in IT stocks lifted investor sentiment.
The BSE Sensex was up 636.62 points, or 0.84%, at 76,696.39, while the NSE Nifty50 rose 159.05 points, or 0.67%, to 23,926.50 as of 10 am.
Buying was broad-based, with almost all sectoral indices trading in the green and India VIX dropping sharply, indicating easing market volatility.
OIL PRICES PLUNGE AFTER US-IRAN PAUSE
The biggest trigger for Monday’s rally was the sharp decline in crude oil prices.
Brent crude slipped 4.45% to $92.47 per barrel, while WTI crude dropped 4.71% to $85.10 after the United States and Iran paused military strikes over the weekend, raising hopes of a de-escalation in the Middle East conflict.
The fall comes after Brent crude had briefly crossed the $100-a-barrel mark last week, triggering fears over inflation, India’s import bill and corporate earnings.
Lower oil prices are a major positive for India, the world’s third-largest crude importer, as they ease inflationary pressures and improve the outlook for economic growth.
Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, said the sharp correction in oil prices has significantly improved market sentiment.
“The sharp dip in Brent crude price from $102 four days ago to around $93 this morning is a sentiment positive for the market. If the de-escalation of the West Asia conflict holds and crude price drifts lower, that can sustain a mild rally in the market,” he said.
IT STOCKS LEAD DALAL STREET HIGHER
Technology stocks emerged as the biggest contributors to the rally after witnessing heavy selling last week.
The Nifty IT index jumped 2.44%, making it the best-performing sector on Dalal Street.
Infosys surged over 3%, Tech Mahindra gained 2.41%, HCLTech climbed 2.23% and TCS advanced 2.18%, providing strong support to both the Sensex and Nifty.
Apart from IT, buying was visible across the market. The Nifty Media index gained 1.57%, Realty rose 1.72%, MidSmall Healthcare climbed 1.67%, MidSmall IT & Telecom advanced 1.62%, Healthcare rose 1.04% and Chemicals added 0.90%.
Among Sensex constituents, IndiGo and Eternal were the top gainers, rising 3.45% each, followed by Infosys, Asian Paints, Bajaj Finance, Tech Mahindra, HCLTech and TCS.
FPIS MAY RETURN AS GLOBAL AI TRADE COOLS
Another factor supporting sentiment is the expectation that foreign portfolio investors (FPIs) could increase allocations to India as concerns around the global AI trade and semiconductor stocks trigger a shift in investment flows.
According to Vijayakumar, the correction in chip-heavy markets could work in India’s favour.
“FII flows have been very inconsistent this month, alternating between buying and selling. The correction in chip stocks and concerns surrounding the AI trade have the potential to revive enthusiasm of FPIs in Indian stocks. The diversity of stocks available in the Indian market is rare among emerging markets. At some point the FPIs will be forced to recognise this and move away from markets dominated by a single stock or two stocks as in Taiwan and South Korea.”
He added that this trend has already begun and could gather momentum in the coming months.
“This is already happening in a small way and this trend is likely to gather momentum, going forward. The price of crude and the progress of the monsoon will be the two factors that will influence this trend.”
BROAD-BASED BUYING RETURNS
The rally was not limited to frontline stocks.
The Nifty Midcap 50 gained 1.18%, the Nifty Smallcap 100 rose 1.21%, while the Nifty Midcap 100 climbed 1.09%, signalling strong participation across the broader market.
Meanwhile, India VIX dropped 6.5%, reflecting easing investor anxiety after weeks of heightened volatility.
Rajesh Palviya, Head of Research, Axis Direct said that the near-term outlook has turned cautiously constructive, although the Nifty still needs to reclaim the 24,000 mark to signal a meaningful recovery.
“As long as the index remains below this level, volatility is likely to persist. Immediate support is placed at 23,650, followed by 23,450, while a sustained move above 24,000 could trigger a pullback towards 24,200–24,300. Going forward, crude oil prices and geopolitical developments will remain the key variables, with sustained softness in oil likely to improve market sentiment further,” he added.
