Sensex gains over 600 points: What's behind today's rally?
What's the story
The Indian stock market witnessed a major surge on Monday, with the Sensex gaining over 600 points to trade above 77,300, while Nifty rose over 200 points, rising above the 24,100 mark. The rally comes after three consecutive days of losses. Investor sentiment was boosted by reports of Iran offering a peace proposal to the US in an effort to resolve the ongoing conflict in West Asia. Global markets also contributed to this positive trend, further lifting investor confidence.
Market performance
Broader markets outperform benchmarks
The broader markets outperformed the benchmarks, with the Nifty Smallcap 100 and Nifty Midcap 100 indices gaining up to 1.6%. This comes as India VIX, a measure of market volatility, fell by around 5% to 18.76 in the morning session. Sun Pharmaceutical Industries' shares surged over 7% after its announcement of a nearly $12 billion acquisition of US-based Organon & Co. Other major gainers included Adani Ports, Kotak Mahindra Bank, Tech Mahindra and Infosys whose shares rose by 2-3%.
Sectoral performance
Sectoral indices and market breadth
All sectoral indices were in the green with Nifty Metal, Nifty Pharma and Nifty Healthcare leading the charge with gains of 2-3%. The market witnessed a strong rally with around 2,513 stocks advancing on NSE while only 519 declined and 80 remained unchanged. Despite the positive market sentiment today, there are still concerns over high oil prices and continued foreign investor outflows.
Geopolitical impact
Iran submits proposal to US for resolving Middle East crisis
Iran reportedly submitted a new proposal to the US through Pakistani mediators, focusing on resolving the Strait of Hormuz crisis and lifting the US blockade. The proposal suggests extending a ceasefire or agreeing on a permanent end to hostilities. Meanwhile, Asian markets traded mostly in green with Japan's Nikkei and South Korea's Kospi gaining around 2% each, hitting fresh record highs.
Investor strategy
Geojit Investment's VK Vijayakumar on market recovery
VK Vijayakumar, Chief Investment Strategist at Geojit Investments, advised investors to wait for clarity on geopolitical developments before making decisions. He said despite macro threats from the energy crisis, India's growth momentum is resilient and optimistic as indicated by rising private capex numbers. The market recovery today can be attributed to dip buying and short-covering after three sessions of sharp decline amid continuous selloff in March due to the West Asia conflict affecting global markets.