Indian equity markets opened the financial year 2026-27 on a strong note amid expectations that the West Asia conflict may come to a conclusion in two to three weeks.
US President Donald Trump had said that the war with Iran could end within weeks, adding that securing the Strait of Hormuz should be handled by oil-reliant nations while Iranian President Masoud Pezeshkian stated that they have the necessary will to bring the crisis to an end.
These comments lifted the global equity market with Brent crude prices briefly falling below the $100 per barrel mark. In the Asian market, Japan’s Nikkei and South Korea's KOSPI rose 5% and 8% respectively on Wednesday. Most European and US indices were also up in the range of 2-4%.
In the local market, the benchmark BSE Sensex ended 1,187 points or 1.65% to 73,132 while Nifty 50 rose 348 points or 1.56% to settle at 22,679.
In the intra-day session, the Sensex rose more than 2,000 points, or 2.8%, to the day's high of 73,965, while the Nifty 50 surged more than 600 points, or 2.7%, to the day's high of 22,941.
Investors' wealth soared by Rs 13 lakh crore as the overall market capitalisation of BSE-listed firms rose to Rs 425 lakh crore from Rs 412 lakh crore in the previous session. Broader markets outperformed the benchmarks with the Nifty Mid Cap index rising 2.2% and the Small Cap index climbing 3.4%.
"Indian equity markets opened FY27 on a strong note, driven by improving risk appetite following US President Donald Trump's remarks hinting at a potential resolution to the West Asia conflict. Broad-based buying lifted benchmark indices, with mid- and small-cap stocks outperforming large caps, aided further by a stabilising rupee and softening crude oil prices,” said Vinod Nair, Head of Research, Geojit Investments.
Nair added that elevated bond yields and intraday volatility capped gains, keeping the overall advance measured rather than emphatic. Despite the constructive tone, markets may remain sensitive to sudden reversals in the evolving geopolitical landscape going forward.
Before the recovery of Wednesday, Sensex and Nifty had declined 11-12% in one month as Brent crude price had increased by more than 60% since the escalation, which began on February 28, disrupted the supply chain.
Higher oil prices for an import-dependent nation such as India are likely to translate into higher inflation in the coming months, exerting pressure on currency stability and corporate margins, thereby impacting overall equity market sentiment.
On the macro front, the rupee weakened past the 95 mark against the US dollar on Monday, hitting a fresh record low despite RBI intervention, and depreciated by over 4% in March. At the same time, India’s 10-year bond yield crossed 7%, its highest level in over 21 months.