Markets rally for 3rd day: Sensex soars 1,000 pts, Nifty near 25,550; investor wealth up Rs 3.4 lakh crore

Indian equity markets have continued their rally for the third straight day as of Thursday, with the BSE Sensex climbing 1,000 points, closing at 83,756, and the NSE Nifty gaining 304 points to settle at 25,549. This upward trend has been largely influenced by easing geopolitical tensions and a significant drop in global crude oil prices. Broader indices, including mid- and small-cap, also registered gains of 0.59 per cent and 0.42 per cent, respectively.

Investor wealth, as measured by BSE market capitalisation, increased by Rs 3.42 lakh crore, reaching a total of Rs 457.44 lakh crore compared to Rs 454.01 lakh crore in the previous session. This surge is a result of a ceasefire between Israel and Iran which has calmed nerves across global markets, creating a risk-on environment and bolstering investor confidence.

The drop in crude oil prices has been a significant factor in this positive market sentiment. Brent crude, which peaked at $79.40 per barrel on June 23, now trades at $66.76, marking a decline of over 15 per cent. The decrease reflects reduced concerns over supply disruptions, particularly with fears of Iran blocking the Strait of Hormuz now lessened following the ceasefire.

"Bullish sentiment is clearly dominating the markets, supported by the RBI's encouraging bulletin highlighting India's economic resilience, easing geopolitical tensions and declining crude oil prices," said Prashanth Tapse, Senior VP (Research) at Mehta Equities. The Reserve Bank of India's report underscores the nation's economic resilience despite ongoing uncertainties.

Despite the positivity, uncertainties remain, particularly regarding unresolved global trade tensions. "With the ceasefire between Israel and Iran, global markets are in a risk-on mode. But the issue of reciprocal tariffs remains unresolved and that could limit the sustainability of this rally," commented VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

Vijayakumar also noted that July 9 is crucial as the 90-day pause on reciprocal tariffs expires, and the outcome of trade negotiations with the US could significantly impact investor sentiment. "Markets will closely watch how trade negotiations with the US unfold. A breakthrough in an India-US trade deal could provide a significant boost to investor sentiment. Conversely, any disappointment could cap further upside."

The market's resilience is further evidenced by the Reserve Bank of India's report, which acknowledges India's robust economic performance despite geopolitical and trade uncertainties.

This ongoing market rally, driven by easing geopolitical issues and lower oil prices, reflects investor confidence but is tempered by potential trade negotiation outcomes, particularly involving the United States, which could influence future market movements.