CHENNAI: Wednesday (June 25) marked a broad risk-on session for Indian markets, supported by calmer geopolitical signals and lower crude prices. Benchmark indices, BSE Sensex rose 586 points of 0.73% to 82,641, while Nifty 50 gained 0.68% to 25,214.2.
Gains were driven by relief from falling oil prices and optimism following a tentative ceasefire between Israel and Iran .
All sectoral indices were in green territory, with meaningful contributions from IT, FMCG, mid/small caps, and select heavyweight stocks. Still, investors should remain watchful of stretched valuations, foreign outflows, and potential flare-ups in geopolitical tensions (notably around the Strait of Hormuz).
Nifty MidCap +0.43%, Nifty SmallCap +1.36%. India VIX dropped nearly 3%, reflecting calmer market sentiment.
Sectoral winners today were Nifty IT, up 1%, and Nifty FMCG, up 0.8%.
The key drivers behind the rally include geopolitical ease, stable to lower oil prices and stronger rupee.
Ceasefire news boosted global risk sentiment and helped oil prices drop sharply—US futures saw West Texas Intermediate fall of about 3.2% and Brent crude about 3.4%. Brent crude softened to sub-$70 following the ceasefire—providing relief to India’s import-heavy economy.
The rupee strengthened 0.2% to ₹85.82/USD amid lower US yields, and RBI’s liquidity withdrawal (₹1 trillion variable reverse repo auction) supported forward premiums .
Supply-Demand Imbalance in IPO
Sensex has surged around 14% in six months, fueling a wave of IPOs (US $1.75 billion expected this week) and secondary offerings amid stretched valuations.
Global Context
While MSCI World Index hit new highs, Asian and emerging market stocks reached their best levels since early 2022, and after Iran’s missile strikes, Brent crude fell 7% intraday, with traders interpreting geopolitical signals as controlled and not targeting critical infrastructure.
Iran’s parliament voted to consider closing the Strait of Hormuz on June 22—a move carrying potential to disrupt oil flows, though deemed unlikely for now.
Risks & Caution Ahead
With Sensex up 14% over six months, record IPO/investment activity raises concerns of a bubble and potential correction if demand wanes. Similarly, any escalation in Middle East tensions may reignite oil price volatility.
Foreign institutional investors have been net sellers (US $10 billion YTD), while domestic fund flows remain soft—investor appetite will be key to sustaining the rally, say analysts.