Sensex gains over 600 points: What's behind today's rally?
What's the story
The Indian stock market witnessed a surge on Monday, with the benchmark indices Sensex and Nifty both registering significant gains. The rally was largely fueled by a sharp decline in crude oil prices, easing geopolitical tensions, and sustained foreign fund inflows. At 1:30pm, the Sensex was up by 621 points or 0.8% to trade at 78,715 while the broader Nifty rose to 24,589 after gaining 205 points or 0.84%.
Market performance
Nifty Midcap 100 and Smallcap 100 post gains
All sectoral indices, except the Nifty Pharma index, were trading in the green.
The broader Nifty Smallcap 100 and Nifty Midcap 100 indices also witnessed gains of 1.08% and 0.84%, respectively.
This broad-based rally across sectors indicates a strong positive sentiment prevailing in the market today.
Market drivers
FPIs turn net buyers in July
The fall in Brent crude, the global oil benchmark, by 4.97% to $83.56 a barrel is seen as a positive development for India.
Foreign Portfolio Investors (FPIs) have also turned net buyers in July, buying equities worth ₹20,199 crore. This includes ₹6,731 crore through exchanges and ₹13,467 crore under 'primary market and others.'
Debt inflows also saw a sharp rise with ₹29,211 crore coming through the 'General Limit' category alone.
Investor sentiment
US President Trump hints at resuming Iran negotiation talks
Investor sentiment improved after US President Donald Trump hinted at resuming negotiations with Iran on Monday. This raised hopes of a diplomatic solution to recent military tensions.
Asian markets traded higher with Hong Kong's Hang Seng index gaining in early trade, while US markets ended positively on Friday.
Nasdaq and other Wall Street futures were up by as much as 1%, indicating a firm opening for US equities later in the day.
Currency impact
Rupee surges by 31 paise against US dollar
The rupee appreciated by 31 paise to 95.12 against the US dollar, largely due to the sharp fall in global crude oil prices and a weaker greenback after Trump's decision to hold off strikes against Iran.
Forex traders attributed this strengthening of the domestic currency to foreign fund inflows, an increase in India's foreign exchange reserves, and support from the Reserve Bank of India (RBI).