India's equity market made a sharp recovery and snapped a six-week losing streak with the BSE Sensex and NSE Nifty logging their best weekly gains in recent years.
Backed by a ceasefire in West Asia that led to a sharp drop in crude oil prices, the BSE Sensex and Nifty gained nearly 6% each in the recently concluded trading week, their strongest weekly rise in percentage terms since February 5, 2021.
The broader market also rallied with the midcap and small-cap indices rising nearly 8% this week.
Realty, automobiles, consumer durables and banking stocks outperformed this week, signalling a gradual pickup in risk-on sentiment. Investors’ wealth surged by a massive Rs 29 lakh during the week as the market cap of all BSE-listed companies grew from Rs 421.81 lakh crore to Rs 450.94 lakh crore.
However, despite the gains, the indices remain 4-5% below pre-crisis levels. On February 27, a day before the West Asia crisis erupted, the Sensex closed at 81,287 and the Nifty at 25,179.
In the month of March, when war raged and crude oil hovered at $100-120 per barrel, both benchmarks had plunged 11-12%, their steepest monthly drop in years.
Brent crude oil prices are now trading below the $100 mark. This, along with the RBI’s intervention, has also lifted the Indian rupee from the record lows of last week, a big positive for markets.
"Indian equity markets posted a volatile but encouraging performance over the week, with investor confidence heavily influenced by movements in crude prices and de-escalation efforts in West Asia. With the announcement of the US-Iran ceasefire mid- week albeit fragile in its details, the underlying sentiment has seen a noticeable improvement compared to previous weeks,” said Vinod Nair, Head of Research, Geojit Investments Limited.
Looking ahead, Nair added that market direction will remain sensitive to geopolitical developments and their implications for India’s macro environment. While recent trends have eased immediate pressures, sustainability will be key. Upcoming US and domestic inflation data, trade figures, and domestic credit indicators will be closely watched. With valuations now more reasonable across several segments, a stable macro backdrop could support extension of market gains, he said.
The market also rallied on Friday (April 10), supported by expectations of concrete developments on the U.S.–Iran front. At close, the Sensex gained 918.60 points, or 1.20%, to settle at 77,550.25, while the Nifty advanced 275.50 points, or 1.16%, to close at 24,050.60.
Investors' focus now shifts to the upcoming diplomatic talks in Islamabad this weekend, where U.S. Vice President JD Vance is set to lead discussions with Iranian officials, an important development for assessing the durability of the ceasefire, said analysts at Bajaj Broking.
Siddhartha Khemka - Head of Research, Wealth Management, Motilal Oswal Financial Services said that Indian markets are likely to remain volatile next week, with the outcome of peace talks over the weekend expected to be a key driver of the market direction.
“Investor sentiment will be closely tied to developments in US–Iran negotiations, while crude oil price movements and foreign fund flow trends will also play an important role. Any easing of tensions could provide further support; however, the durability of the recovery will hinge on meaningful progress in negotiations and stability in global energy markets,” he added.