Sensex, Nifty close higher despite Israel-Iran war; IT, banking shares lead gains

The benchmark indices rallied on Monday despite the ongoing war between Iran and Israel. Sensex jumped 677 points to 81,796, while the broader Nifty closed 228 points higher at 24,946. Investor wealth rose by Rs 3 lakh crore to Rs 450.18 lakh crore on BSE today against Rs 447.21 lakh crore on Friday. 

Midcaps and smallcaps shares ended in the green in the current session. On BSE, the midcap index rose 424 pts to 46,105 and the small-cap index climbed 203 pts to 53,573. 

On a sectoral basis, capital goods, consumer durables, IT and banking indices were the top gainers on BSE ,rising  up to 597 pts. 

Despite ongoing geopolitical tensions between Israel and Iran, the market has shown resilience, bolstered by gains in large-cap stocks as investors focus on long-term fundamentals. Vinod Nair noted, "Geopolitical developments in the Middle East are likely to influence near-term market sentiment, with any signs of de-escalation being closely monitored." The oil and gas sector has recorded robust gains, while the IT sector has outperformed, driven by anticipation of the upcoming US Fed policy meeting.

Rupak De, Senior Technical Analyst at LKP Securities, observed a rally in the index as it reclaimed the 21-EMA after a brief dip. "On Friday, it had already found support at the recent consolidation low," he said. The weak FII long-short ratio of around 20% in index futures has contributed to the recovery of Nifty. Investors await the Fed's commentary post-rate announcement, with a rally towards 25,350 looking probable once Nifty crosses the 25,000 mark. The downside support stands at 24,850.

Small-cap stocks are expected to underperform due to high valuations and lack of short-term catalysts. As geopolitical developments continue to play a significant role, analysts are watching for any signs of easing tensions, which could stabilize market sentiment. Meanwhile, sectors such as oil and gas and IT remain areas of strength amidst these dynamics, with the latter buoyed by expectations surrounding the Fed's monetary policy direction.

Harshal Dasani, Business head, INVasset PMS said, "Global markets often behave contrary to mainstream expectations—and the recent escalation between Israel and Iran is a textbook example. While the initial reaction was a spike in oil prices and a flight to safety, the absence of direct supply disruptions, especially through strategic chokepoints like the Strait of Hormuz, quickly settled nerves. Crude has since stabilized, easing inflation concerns and allowing markets to refocus on economic fundamentals. Every fresh negative headline may cause temporary jitters, but the broader trend remains bullish. As long as geopolitical risks remain contained and don’t evolve into systemic shocks, markets will continue to absorb such events and march toward new highs—driven by domestic tailwinds, selective global optimism, and resilient investor sentiment."

Sundar Kewat, Technical and Derivatives Analyst, Ashika Institutional Equity – Ashika Stock Broking said, Despite mounting global uncertainty triggered by escalating tensions in the Middle East, Indian markets remained resilient. The geopolitical landscape took a sharp turn as Israeli military strikes on Iran raised alarms over potential disruptions in oil supply and regional stability, unsettling global investors."