Domestic stock markets staged a sharp rebound in early trade on Wednesday, with the Sensex surging over 2,700 points and the Nifty climbing more than 3.4% in pre-open deals.
As of 9:21 am, the BSE Sensex stood at 77,345.65, up 2,729.07 points or 3.66%, while the Nifty 50 was at 23,918.95, higher by 795.30 points or 3.44%. Investor wealth swelled by over Rs 14 lakh crore in early trade.
The rally follows a phase of volatility and is being driven by a combination of easing global tensions, softer crude prices, and renewed investor confidence.
The . A temporary easing of geopolitical tensions in West Asia has calmed nerves across markets.
This has led to a sharp drop in crude oil prices, a critical factor for India, which relies heavily on imports. Softer oil reduces inflationary pressures and improves macro stability, giving equities a strong tailwind.
Global cues are also supportive. Strong overnight gains in US markets have lifted sentiment across Asia, encouraging investors to move back into equities. Foreign institutional investors, who had been persistent sellers, are now showing early signs of stabilising their flows.
Domestically, heavyweight banking and financial stocks are leading the rally. These stocks had seen recent corrections and are now witnessing strong buying interest. The move is also being amplified by short covering, as traders unwind bearish bets amid improving sentiment.
According to Dr. V K Vijayakumar, the recent has significantly altered the near-term market outlook. The sharp correction in Brent crude prices following the development has turned the market decisively bullish again.
He noted that the reopening of the Hormuz Strait is a key positive, as it reduces supply-side disruptions and brings stability to energy markets. Lower crude prices, combined with reasonable valuations, are giving bulls the confidence to return aggressively.
Dr. Vijayakumar also expects the Reserve Bank of India to maintain a pause on interest rates, supported by easing inflation risks due to falling crude. The policy stance is likely to remain neutral, allowing policymakers to balance growth and inflation concerns more effectively.
He added that a strengthening rupee could change foreign investor behaviour, potentially forcing FPIs to halt sustained selling and even turn buyers.
On the market outlook, he believes the Nifty could see a sharp gap-up opening with continued short covering pushing it towards the 24,000 mark in the near term. However, further direction will depend on evolving global and macroeconomic conditions.
From a sectoral perspective, beaten-down financials are expected to stage a strong recovery. Additionally, crude-sensitive sectors such as refineries, aviation, paints, adhesives, and capital goods companies with exposure to the Gulf region are likely to remain in focus.
According to Anand James, the Nifty is now within striking distance of the 24,400 target that had been projected at the start of the week.
He noted that the previous session’s dips were contained within key technical levels, with support seen around 22,790 and a downside marker at 22,640, which enabled a late surge in the index. While a gap-up opening is likely, initial gains could face some resistance near 23,950.
However, he added that the broader uptrend remains intact. As long as any pullbacks do not extend beyond 23,465, the upward trajectory is expected to resume, keeping the near-term bullish outlook intact.
Sensex has surged sharply, but the real test lies ahead as global cues, crude prices, and policy signals will determine whether this momentum sustains or fades in the sessions to come.