Sensex closes 940 points up: Key reasons behind today's rally
What's the story
The Indian stock market witnessed a major surge on Wednesday, with the benchmark indices Sensex and Nifty gaining over 1% each. The rally was largely fueled by reports of a potential peace deal between the United States and Iran. The Sensex jumped over 1,000 points to an intraday high of 78,022.78 but closed slightly lower at 77,958. The Nifty hit a day's high of 24,356.50 during the session and closed at 24,330, up by nearly 300 points.
Market performance
Mid and small-cap stocks also witnessed a rally
The broad-based buying interest in the Indian stock market also lifted mid and small-cap segments. The BSE 150 Midcap index surged by 1.67%, while the BSE 250 Smallcap index jumped by 1.77%. Investors gained nearly ₹6 lakh crore as the overall market capitalization of BSE-listed firms rose to ₹473 lakh crore from just under ₹467 lakh crore in the last session.
Market drivers
US-Iran peace deal talks drive energy prices higher
Reports suggest that the US and Iran may be close to a peace deal, which has driven energy prices higher. Axios reported that the US believes it is "getting close to an agreement with Iran on a one-page memorandum of understanding to end the war and set a framework for more detailed nuclear negotiations." Meanwhile, Brent Crude prices fell 6% amid news flows suggesting an end to Middle East conflict, potentially reopening Strait of Hormuz.
Sectoral performance
Rupee surges to 1-week high
The Indian stock market rallied on the back of massive short covering across sectors, driven by falling crude oil prices and easing geopolitical concerns. Bank, auto, financial services, pharma, and realty indices jumped over 2% each while metal, IT and consumer durables rose up to 1%. The Indian rupee also climbed 0.7% to its one-week high of 94.5975 per dollar in intraday trade on Wednesday amid falling crude oil prices and improving sentiment.