Benchmark indices extended their rally on Thursday, with the Sensex surging over 600 points and the Nifty inching closer to the 24,200 mark, as easing crude oil prices, strong Asian markets and gains in banking and auto stocks fuelled investor optimism.
The S&P BSE climbed 602.60 points, or 0.78%, to 77,593.82 in afternoon trade, while the NSE Nifty50 advanced 173.55 points, or 0.72%, to 24,195.20.
The rally comes after a sharp correction earlier this week and extends the recovery that began after progress in US-Iran peace talks eased fears of disruptions to global oil supplies.
The biggest trigger behind Thursday’s rally is the continued slide in prices.
Brent crude fell another 1.76% to $72.44 a barrel, dropping below levels seen before the Iran conflict erupted. Oil prices have now corrected sharply as tanker traffic through the gradually returns to normal following the interim peace agreement between the US and Iran.
For India, which imports more than 85% of its crude oil requirements, lower oil prices are a major positive. They reduce the country’s import bill, ease inflationary pressures, improve the current account deficit and balance of payments, and create room for stronger economic growth.
Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, said that brent crude falling below $73 a barrel has removed one of the biggest macroeconomic risks facing India.
He said concerns over the current account deficit and balance of payments have eased considerably, improving the outlook for GDP growth and inflation in FY27. This, in turn, is providing a strong bullish trigger for the stock market.
Apart from lower crude prices, positive global cues also supported domestic equities.
Asian markets rallied after technology stocks rebounded sharply, with South Korea’s KOSPI jumping as much as 6% after suffering a 10% crash earlier this week. The recovery was driven by strong quarterly results from Micron Technology, which revived optimism around artificial intelligence-related demand.
Samsung Electronics climbed over 6%, while SK Hynix surged more than 11%, helping lift the broader MSCI Emerging Markets Asia index by around 2%.
The rebound in Asian equities improved global risk appetite and encouraged buying across emerging markets, including India.
Buying was concentrated in banking and automobile stocks.
Nifty Auto emerged as the top-performing sectoral index, gaining 2.92%, while Nifty Financial Services rose 0.81% and Nifty Private Bank climbed 0.89%.
Among Sensex constituents, Maruti Suzuki surged 4.91%, Mahindra & Mahindra gained 3.99%, IndiGo jumped 4.58%, ICICI Bank rose 1.86%, Larsen & Toubro added 1.84%, Kotak Mahindra Bank gained 1.60%, State Bank of India climbed 1.50% and HDFC Bank advanced 1.07%.
Financial stocks have remained in favour amid improving macroeconomic conditions and expectations that lower crude prices will support economic growth.
Technology shares traded mixed after Wednesday’s gains.
TCS rose 0.63% and HCLTech edged up 0.05%, while Infosys slipped 0.71% and Tech Mahindra fell 1.28%. As a result, the Nifty IT index remained marginally lower by 0.17%.
Metal stocks continued to underperform, with the Nifty Metal index falling 1.20% amid concerns over global demand.
The rally remained largely concentrated in large-cap stocks.
The Nifty 100 gained 0.71% and Nifty 200 rose 0.57%, while the Nifty Midcap 50 was up just 0.04%, the Nifty Midcap 100 was flat and the Nifty Smallcap 100 slipped 0.19%.
India VIX declined 3.24%, indicating easing volatility in the market.
While falling crude prices continue to support the market, experts believe investors should keep an eye on the progress of the southwest monsoon.
Dr. Vijayakumar cautioned that deficient rainfall remains the biggest domestic risk. He said sectors dependent on rural demand, including tractors, fertilisers, agrochemicals, entry-level two-wheelers and rural-focused FMCG companies, could face pressure if rainfall remains weak.
At the same time, he believes premium consumption, export-oriented businesses, pharmaceuticals and urban-focused sectors are likely to remain resilient.
With crude prices at multi-month lows, foreign investor selling easing and global risk appetite improving, market participants expect Dalal Street to remain supported in the near term, although the progress of the monsoon and global central bank signals will continue to influence sentiment.
(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)