The Indian stock market traded sharply higher on Monday, with Nifty rallying 1.6% and Sensex rising 0.7%, as US President Donald Trump said talks with Iran would take place today, triggering a sharp fall in oil prices and boosting investor sentiment on Dalal Street.
Sensex rose over 544 points to close above 78,639, while Nifty 50 rose around 391 points to end the session at 24,774. The sharp gains added nearly Rs 5 lakh crore to the total market capitalisation of all companies listed on BSE, pulling it up to Rs 491 lakh crore.
IndiGo, Infosys and TCS shares jumped around 4% each to lead gains on Sensex. Bajaj Finserv, Eternal, Axis Bank, ITC and L&T shares rose 2-3% to follow. Bucking the trend, Sun Pharma shares dropped nearly 2% to lead losses on the benchmark index.
Among sectors, Nifty IT rallied more than 3% to lead gains, white Nifty FMCG and Nifty Private Bank indices gained around 2% each. Broader markets also closed in the deep green, with Nifty Midcap 100 and Nifty Smallcap 100 indices rising over 1% each. Overall market breadth remained bullish, with 2,360 stocks advancing on the NSE against 1,027 declines, while 118 remained unchanged.
1) Trump hints at Iran-US war talks
US President Donald Trump said talks with Iran would take place on Monday but declined to set a deadline for an agreement. Late on Saturday, he said on his Truth Social platform that Iran and other Middle Eastern countries had sought time to finalise an agreement that would result in "the Immediate, Complete and Total" reopening of the crucial waterway and bring "an end to Iran's nuclear threat". Trump added that he had agreed to cancel the attack to allow for a rapid agreement, and said Israel had also committed to the effort.
This comes after weeks of escalations in the Middle East war made an interim peace agreement futile, rattling global markets.
2) Oil prices drop
As a result of the latest developments in the Middle East, oil prices sharply tumbled around 5%. Brent crude futures fell below $84 per barrel while WTI Crude futures were down to $80 per barrel.
On Sunday, OPEC+ approved an increase of around 188,000 barrels per day in its oil production quota for September, marking the completion of the rollback of one tranche of its voluntary output cuts.
3) Global cues
Asian tech-heavy stock markets dropped on Monday, with South Korea’s Kospi plunging 5% after a record rally in the previous session. Japan’s Nikkei also declined around 1%. Dalal Street’s rise against an overall downtrend in Asian markets has been noted recently, with analysts highlighting that India has likely become a strong anti-AI allocation, boosting Indian equities during a time global investors are massively offloading AI stocks.
4) Q1 earnings
As many as 573 companies are set to announce their earnings for the April-June quarter (Q1 FY27) this week, with notable names including Westside and Zudio-parent Trent, public lender SBI, ecommerce major Nykaa, telecom giant Bharti Airtel, Titan and others. “The Q1 results declared so far also have surprised a bit on the upside. If this trend sustains, FY 27 earnings growth can be better than initial expectations,” said VK Vijayakumar, Chief Investment Strategist at Geojit Investments.
5) FII buying
Foreign investors remained net buyers of Indian equities for the past three consecutive sessions, after a five-day long selling streak. Overall during the month, foreign investors mostly remained bullish on Dalal Street as global tech rout may have dampened sentiment for other markets.
“A significant recent trend is the FPIs buying into Indian mid and small cap stocks. The high growth potential of this segment is the principal reason for the increasing FPI allocation to these segments,” said VK Vijayakumar, Chief Investment Strategist at Geojit Investments.
6) Bond yields drop
US Treasury yields dropped, further boosting equity market sentiment. The yield on benchmark US 10-year notes fell to 4.698% while the 30-year bond yield fell to 5.24%. The yield on 2-year notes, which typically moves in step with Fed interest rate move expectations, reduced to 4.25%. Falling bond yields typically make bonds less attractive to investors, which in turn can lead to some uptrend in markets.
What lies ahead?
The decline in crude oil prices, driven by expectations of renewed dialogue between the US and Iran, provided relief to markets by easing concerns over inflation and corporate earnings, said Vinod Nair, Head of Research at Geojit Investments. He added that the market sentiment was further supported by a rebound in FII inflows and a strengthening rupee, although elevated US bond yields remain a key risk to the sustainability of foreign flows into emerging markets. Most sectors ended in positive territory, led by IT and FMCG, while pharma witnessed profit booking following its recent gains and the latest Q1 results, he noted.
The Q1 FY27 earnings season continues to progress ahead of expectations, with small-cap companies emerging as the strongest performers relative to large- and mid-cap peers, the analyst said. “Investors will closely watch the upcoming RBI policy meeting for commentary on inflation risks, liquidity conditions, and the future policy trajectory, although interest rates are widely expected to remain unchanged,” he added.
Technical view on Nifty
Nifty rebounded after nearly two months of consolidation, delivering a decent recovery despite the prevailing subdued market sentiment, said Rupak De, Senior Technical Analyst at LKP Securities. However, based on the closing price-adjusted chart, the index has rallied up to its 200-day moving average (200DMA), which is a crucial resistance level, he added.
"From here, two scenarios are possible. The first is that the index faces resistance near the 200DMA and retraces towards the 24,400 level, allowing the recent sharp rally to cool off. Alternatively, if the index manages to break and sustain above the 200DMA, i.e., above 24,800, it could trigger follow-up buying and extend the rally towards 25,000–25,350," according to the analyst.
