Indian equity benchmarks continued their rise on Wednesday morning, with both the Nifty50 and BSE Sensex increasing by almost 1 per cent in early trade. At 9:16 AM, the Nifty50 was trading at 23,126.65, up by 214 points or 0.94 per cent, whereas the Sensex increased by 707 points or 0.95 per cent and was trading at 74,775.22.
The early gains are in line with other Asian markets, which are also moving higher as sentiment is improving regarding Washington’s efforts to solve the ongoing conflict in the Middle East. The weaker dollar is also adding strength to global equities.
Global uncertainty still in play
However, the positive trend observed in the Asian markets did not reflect in the US markets on Tuesday. The stocks were volatile as investors were apprehensive between the increasing prices of crude oil and the prospects of a diplomatic breakthrough in the Middle East.
There were reports of the deployment of more American troops to the region, even as the talks were making some headway.
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Crude oil prices fell significantly by over 5 per cent on Wednesday on expectations of a potential ceasefire, leading to a decline in disruptions to crude oil supply from the region. This comes after reports of a 15-point proposal by the US to Iran to end the conflict.
The decline in crude oil prices was a welcome respite for the market.
FII selling continues, DII support holds
On the domestic side, foreign institutional investors were once again sellers, which offloaded stocks amounting to Rs 8,009.56 crore on Tuesday. However, on the other hand, domestic institutional investors provided support with a net purchase of Rs 5,867.15 crore.
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Improving geopolitical signals have revived optimism in the market, Times of India cited Dr VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, as saying. He noted that signs of de-escalation, along with Iran’s assurance on safe passage through the Strait of Hormuz, have helped ease concerns around energy supplies.
He also added that while markets may see a rebound if the positive trend continues, sustained recovery would depend on foreign investors slowing their selling and stability in the rupee. In the near term, mid and small-cap stocks could see stronger gains compared to large caps.
