Bulls take stage as markets hope it’s curtains on war

Mumbai: India’s equity indices rebounded on Wednesday, tracking the overnight rise on Wall Street, as hopes of a resolution of the West Asia conflict sparked a decline in oil prices.

Iranian President Masoud Pezeshkian signalled willingness to end its war with the US and Israel, while US President Donald Trump said hostilities would be over in a few weeks, sending Brent crude tumbling below $100 a barrel briefly and triggering an equity rally. Still, optimism remains fragile with investors wary of being caught off guard after being wrongfooted by shifting signals from political leaders.

The NSE Nifty climbed 1.6% or 348 points to 22,679.40. The BSE Sensex finished at 73,134.32, up 1.7% or 1,186.77 points. Both indices jumped as much as 2.8% during the day but erased some of their gains at close. Brent crude was at $102.70, down 1.2% at press time, off the day’s low of $98.35.

“The market bounce was because Iran said it was willing to stop the war, provided the US gives assurance against future attacks,” said Sunny Agrawal, head of fundamental research, SBI Securities. However, he said, differing reports by end of the day “led to Nifty paring some of its gains.”

Breather, Not Reversal

US markets rallied 2-4% overnight on investor hope the war will come to an end sooner rather than later after Pezeshkian said Iran is open to stopping the war, albeit with guarantees. Asian markets rose Wednesday. South Korea surged 8.4% while Japan and Taiwan gained 5.2% and 4.6%, respectively. Hong Kong rose 2% and China advanced 1.5%. To be sure, Trump’s subsequent social media comments complicated the message, ahead of a TV address he’s scheduled to deliver at 6:30 am India time on Thursday. The Volatility Index (VIX) dropped 10.3% to 25 as traders tempered near-term risk expectations.

“The softening risk implies some ease in the overall bearish sentiment as markets were also extremely oversold, but investors should not read much into it as it’s expected to be a breather and not a trend reversal,” said Ajit Mishra, SVP, research, Religare Broking.

Until the Nifty crosses 23,500 levels decisively, a sustained recovery is not anticipated, he said.

Most sectoral indices closed higher on Wednesday. The Nifty Media and PSU Bank indices jumped 3.7%. Nifty Metal gained 2.5% while the Bank Nifty rose 2.3%. The Nifty IT and Auto indices moved about 2% higher.