India’s equity market made healthy gains on Tuesday as investor sentiment improved on expectations of easing geopolitical tensions, following US President Donald Trump's signal that military operations in Iran could be nearing an end. This triggered a sharp decline in crude oil prices and a rally in the global equity market.
At Tuesday’s close, the benchmark BSE Sensex gained 639.82 points, or 0.82%, to settle at 78,205.98, while the NSE Nifty50 advanced 233.55 points, or 0.97%, to end at 24,261.60. The surge came after the market witnessed three sessions of intense selling as brewing tensions in West Asia led to a sharp spike in crude oil prices, stoking fears of inflation, especially among nations that rely on imported oil to meet energy demand.
In recent sessions, Brent crude spiked to $119/barrel post the continued closure of the Strait of Hormuz, limited storage facilities in the producer countries and the attacks on oil & gas infrastructure and vessels. On Tuesday, it fell by over 5%, trading in the range of $93-95/barrel.
Despite Trump’s assurance and a breather on Tuesday, the two sides, the US-Israel coalition and Iran continue to exchange blows with US Defence Secretary Pete Hegseth stating on Tuesday that American military operations against Iran are set to intensify. The Iranian Revolutionary Guard Corps said that it launched the 34th wave of strikes at US and Israeli targets.
Vinod Nair, Head of Research, Geojit Investments said that Dalal Street mirrored the improvement in global sentiment after the sharp decline in crude oil prices, following comments from Trump hinting at a possible end to the war. However, elevated levels of India VIX continued to signal underlying uncertainty in the market.
“In the near term, markets are likely to remain in the woods, with investors closely monitoring signs of geopolitical de-escalation. Greater clarity could trigger value buying in sectors that have been most affected by recent volatility,” added Nair. The rupee also traded stronger with gains of 0.50%, moving back above 92.00, as the dollar index slipped below 99.
Tension in West Asia escalated after US and Israeli forces targeted key Iranian sites last weekend, resulting in the death of Supreme Leader Ayatollah Ali Khamenei. Iran swiftly responded with a barrage of ballistic missiles aimed at Israeli cities and important Middle East hubs such as Dubai, Kuwait and Bahrain.
The Sensex has declined by more than 4,000 points and Nifty is down over 1,230 points in the past seven trading sessions.
On the sectoral front, most indices ended in positive territory on Tuesday except I.T and oil & gas. The Auto index led the gains with a rise of 3%. In the broader market, the Nifty Midcap index advanced 1.6%, while small-cap indices gained 2%. Among Nifty50 stocks, Shriram Finance, Eicher Motors and Tata Motors PV were the top gainers.