India's stock market bounced back on Tuesday, tracking a sharp pullback in global crude prices after US President Donald Trump signalled a potential end to the Iran war, offering a reprieve to a market battered by geopolitical volatility.
The 30-share S&P BSE Sensex surged as much as 960.09 points, or 1.23%, to 78,526.25 points, even as the wider Nifty 50 gained 1.14% to an intraday high of 24,303.80 points. The anticipated bounce follows a brutal trading session where domestic indices hit near one-year lows and volatility spiked to levels not seen in 21 months.
Energy Relief
The primary catalyst for the surge is the sudden cooling of the oil market. Brent crude futures tumbled 6.6% to $92.45 a barrel, while US West Texas Intermediate (WTI) fell to $88.65.
This marks a dramatic reversal from Monday’s surge, where prices breached $100 a barrel amid fears that a widening US-Israeli conflict with Iran would choke global supply. For India, which imports more than 80% of its oil, the price drop mitigates immediate concerns regarding imported inflation and a widening current account deficit.
“The panic reaction in crude prices which took Brent to near $120 yesterday has seen a reversal this morning…,” VK Vijayakumar, chief investment strategist at Geojit Investments Ltd., told Hindustan Times over email. “This kind of extreme swing of near $30 in one day is reflective of the huge uncertainty surrounding the impact of the West Asian conflict on global crude supplies.”
{{/usCountry}}“The panic reaction in crude prices which took Brent to near $120 yesterday has seen a reversal this morning…,” VK Vijayakumar, chief investment strategist at Geojit Investments Ltd., told Hindustan Times over email. “This kind of extreme swing of near $30 in one day is reflective of the huge uncertainty surrounding the impact of the West Asian conflict on global crude supplies.”
{{/usCountry}}To be sure, geopolitical crises like the ongoing war has short-term impact on the economy and markets. The idea is to stay invested, Vijayakumar said.
“The correction in the market has made stock prices, particularly of large caps, fair. Sectors like financials, automobiles, pharmaceuticals and defence have good prospects,” he said.
Market Context
- Weekly Slump: Both the Nifty 50 and the Sensex are coming off their worst weekly performance in over a year, shedding approximately 2.9% last week.
- Volatility: The India VIX (Volatility Index) hit a 21-month high on Monday during the sharpest single-day selloff in a month.
- Institutional flow: Foreign Institutional Investors were net sellers on Monday, offloading ₹6,353 crore, while domestic institutional investors continued to support with purchases of ₹7,625 crore.
Stocks to Watch
Cipla Ltd.: Its US unit is recalling Lanreotide (tumor drug) injections, warning of a temporary supply shortage.
Dixon Technologies: Received government approval (MeitY) for an investment by HKC Overseas into its display technology subsidiary.
Acme Solar: Commissioned 4 MW of its 100 MW wind project in Gujarat; received official certification.