Indian equity markets extended their winning streak for the third day on Thursday, with the BSE Sensex jumping 1,000 points to close at 83,756 and the NSE Nifty rising 304 points to end at 25,549. The rally was driven by easing geopolitical tensions and a sharp fall in global crude oil prices. Broader market indices also saw gains, with mid-cap and small-cap indices up by 0.59% and 0.42%, respectively.
Investor wealth, as measured by BSE market capitalisation, increased by Rs 3.42 lakh crore, reaching a total of Rs 457.44 lakh crore compared to Rs 454.01 lakh crore in the previous session. This surge is a result of a ceasefire between Israel and Iran which has calmed nerves across global markets, creating a risk-on environment and bolstering investor confidence.
The drop in crude oil prices has been a significant factor in this positive market sentiment. Brent crude, which peaked at $79.40 per barrel on June 23, now trades at $66.76, marking a decline of over 15 per cent. The decrease reflects reduced concerns over supply disruptions, particularly with fears of Iran blocking the Strait of Hormuz now lessened following the ceasefire.
“Bullish sentiment is clearly dominating the markets, supported by the RBI’s encouraging bulletin highlighting India’s economic resilience, easing geopolitical tensions and declining crude oil prices,” said Prashanth Tapse, Senior VP (Research) at Mehta Equities. The Reserve Bank of India’s report underscores the nation’s economic resilience despite ongoing uncertainties.
Despite the positivity, uncertainties remain, particularly regarding unresolved global trade tensions. “With the ceasefire between Israel and Iran, global markets are in a risk-on mode. But the issue of reciprocal tariffs remains unresolved and that could limit the sustainability of this rally,” commented VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Vijayakumar also noted that July 9 is crucial as the 90-day pause on reciprocal tariffs expires, and the outcome of trade negotiations with the US could significantly impact investor sentiment. “Markets will closely watch how trade negotiations with the US unfold. A breakthrough in an India-US trade deal could provide a significant boost to investor sentiment. Conversely, any disappointment could cap further upside.”
The market’s strength is further highlighted by a Reserve Bank of India report, which notes India’s solid economic performance despite global trade and geopolitical challenges.
The continued rally, supported by easing geopolitical tensions and falling oil prices, shows growing investor confidence. However, future market trends may be influenced by the outcome of key trade negotiations, especially those involving the United States.