Mumbai, 8 April

Equity benchmark indices Sensex and Nifty surged nearly 4 per cent on Wednesday, following an impressive rally in global markets and a drop in crude oil prices after the US and Iran announced a two-week ceasefire.

The RBI decision to keep the policy repo rate unchanged, heavy buying across all sectors and a strengthening rupee against the US dollar also improved investor sentiment, traders said.

Rallying for the fifth day in a row, the 30-share BSE Sensex jumped 2,946.32 points or 3.95 per cent to settle at 77,562.90, registering its best trading day in five years. During the session, it surged 3,018.96 points or 4 per cent to 77,635.54.

A total of 3,859 stocks advanced, while 537 declined and 101 remained unchanged on the BSE.

The 50-share NSE Nifty soared 873.70 points or 3.78 per cent to end at 23,997.35, the highest single-day rally in 11 months. It rallied 901.5 points or 3.89 per cent to 24,025.15 during intra-day trade.

"The rally was primarily driven by a sharp improvement in global sentiment following the announcement of a temporary ceasefire between the US and Iran, which led to a significant cooling in crude oil prices and eased concerns around inflation and global growth," Ajit Mishra, SVP, Research, Religare Broking Ltd, said.

Additionally, the Reserve Bank of India’s policy decision to maintain the status quo on rates with a neutral stance was perceived as supportive for equities, he pointed out.

From the Sensex pack, InterGlobe Aviation jumped the most by 8.22 per cent. Larsen & Toubro, Bajaj Finance, Mahindra & Mahindra, Axis Bank and Maruti were also among the prominent gainers.

In contrast, Tech Mahindra, Sun Pharma and Power Grid were the laggards.

All sectoral indices ended higher. The Realty index jumped 6.76 per cent, auto (6.55 per cent), BSE PSU Bank (5.79 per cent), Bankex (5.72 per cent), Private Banks index (5.62 per cent), Financial Services (5.48 per cent), Services (5.22 per cent), Consumer Discretionary (5.11 per cent) and Industrials (4.87 per cent).

On the other hand, the BSE MidCap Select index jumped 4.93 per cent, and the SmallCap Select index rallied 4.01 per cent.

Brent crude, the global oil benchmark, tumbled 13.89 per cent to USD 94.09 per barrel.

The rupee appreciated 47 paise to close at 92.59 (provisional) against the US dollar on Wednesday.

In Asian markets, South Korea's benchmark Kospi surged 6.87 per cent and Japan's Nikkei 225 index jumped 5.39 per cent. Shanghai's SSE Composite index and Hong Kong's Hang Seng index also recorded sharp rallies.

European markets were trading significantly higher.

US markets ended flat on Tuesday.

"The ceasefire announcement sharply reduced fear and risk-off sentiment, with India’s volatility index dropping over 20 per cent, indicating a swift compression in uncertainty. This positive sentiment was mirrored across global markets, as the US, European, and Asian indices posted a broad-based recovery, reinforcing the strength of the current rally," Ponmudi R, CEO of Enrich Money, an online trading and wealth tech firm, said.

Energy markets reacted sharply to the ceasefire developments, he said.

"With Iran signalling the possibility of safe passage through the Strait of Hormuz during this two-week window, Brent crude corrected sharply towards the USD 92 mark," Ponmudi added.

Meanwhile, the Reserve Bank of India kept its key policy rate unchanged on Wednesday, adopting a cautious wait-and-watch stance as policymakers assessed the fallout from the six-week Iran conflict on energy supplies, inflation and growth.

The central bank's six-member Monetary Policy Committee voted unanimously to keep the benchmark repurchase rate unchanged at 5.25 per cent, flagging heightened uncertainty after the West Asia conflict drove crude prices sharply higher, weakened the rupee and disrupted trade flows.

Foreign Institutional Investors (FIIs) offloaded equities worth Rs 8,692.11 crore on Tuesday, according to exchange data. Domestic Institutional Investors (DIIs), however, bought stocks worth Rs 7,979.50 crore.

Vinod Nair, Head of Research, Geojit Investments Limited, said, "The interim ceasefire is seen as a step toward broader regional stability. India benefits immediately from the reopening of the Hormuz Strait, which has pushed oil prices below USD 100 and reduced downside risks to FY27 EPS growth".

The sharp improvement in sentiment has driven a notable decline in the 10-year bond yield and strengthened the rupee, while the RBI’s status quo stance has further supported financials, he added.

On Tuesday, the Sensex jumped 509.73 points or 0.69 per cent to settle at 74,616.58. The Nifty climbed 155.40 points or 0.68 per cent to end at 23,123.65.

Although the Q4 results outlook remains muted, investors are focusing on reasonable valuations and a stable medium-term earnings trajectory, suggesting that the rally still has room to continue in the near term, Nair said.