Sensex jumps 1,372 pts, Nifty tops 22,900; Rs 9 lakh crore wealth added. Dead cat bounce or rally ahead?

Domestic equity benchmarks BSE Sensex and NSE Nifty zoomed on Tuesday amid value buying and tracking signs of relief in the West Asia conflict as US President Donald Trump announced a five-day pause in attacks on Iran.

At close, the Sensex jumped 1,372.06 points, or 1.89 per cent, to close at 74,068.45, while the Nifty surged 399.75 points, or 1.78 per cent, to end at 22,912.40. Both benchmark indices declined around 2.5% each in the previous three sessions.

The resulting supply chain issues are unlikely to have a long-term impact on markets, with earnings disruptions expected to last one to two quarters, said Vinod Nair, Head of Research, Geojit Investments Limited.

Investors’ wealth appreciated by Rs 9 lakh crore, as the combined market capitalisation of BSE-listed companies soared to Rs 423 lakh crore, compared with Rs 414 lakh crore in the previous session.

“Meanwhile, domestic fundamentals remain strong, supported by monetary and fiscal measures that are expected to drive demand once external uncertainties ease," Nair added.

Top gainers & losers

Among Sensex players, Larsen & Toubro (L&T) emerged as the top gainer, rising 5.19% to Rs 3515.35. InterGlobe Aviation (IndiGo) followed with a 5.18% gain, while Eternal, Asian Paints, Bajaj Finance and UltraTech Cement rose 4.85%, 4.77%, 4.69% and 4.15%, respectively. 

While Power Grid Corporation of India and State Bank of India (SBI) were the only losers on the 30-pack index, which declined up to 0.81%.

The India VIX, which had surged to near 27 in the previous session, has eased to around 25, indicating a partial unwinding of panic-driven positions, said Hariprasad K, SEBI-registered Research Analyst and Founder, Livelong Wealth.

For the 50-pack index, Hariprasad said the broader trend continues to signal underlying weakness, suggesting that caution is warranted until the index decisively reclaims and sustains above the 23,000 mark.

Five stocks, namely HDFC Bank, ICICI Bank, L&T, Bajaj Finance, and Kotak Mahindra Bank, contributed largely to the Sensex’s jump.  

Among sectoral indices, all major sectors ended the session on a positive note. The BSE Bankex jumped 2.40% to settle at 59,218.21, while the BSE Auto index rallied 2.30% to close at 54,195.16.

“While this suggests that immediate fear in the market has subsided, volatility remains elevated, reflecting that uncertainty around geopolitical developments is far from resolved,” Hariprasad said.

Hariprasad said that while today's rally represents a temporary improvement in sentiment caused by lower volatility and crude prices, it is primarily tactical in nature. 

“The sustainability of this recovery will depend on concrete developments in geopolitical tensions and stability in global macro conditions. Until then, markets are likely to remain sensitive to external cues, with intermittent volatility and a sell-on-rise approach continuing to dominate near-term sentiment,” he added.