Sensex, Nifty: 7 reasons why stock market rallied today; US-Iran ceasefire, oil prices & more

Benchmark stock indices Sensex and Nifty soared over 3 per cent each in Wednesday's trade, as crude oil prices tumbled as much as 17 per cent, and global markets rallied up to 6 per cent, following a two-week ceasefire between the US and Iran, and an agreement over opening up of Strait of Hormuz. The US-Iran peace talks may start as soon as Friday in Islamabad, triggering risk-on trade. 

At 9.26 am, the BSE Sensex was trading at 77,164.41, up 2,547.83 points or 3.41 per cent. Nifty soared 744 points, or 3.22 per cent, to 23,867.45. Fear gauge India VIX plunged 17.97 per cent to 20.26.

US-Iran  ceasefire

The US President Donald Trump in a social media post said he agreed to suspend the bombing and attack on Iran for a period of two weeks. 

"This will be a double sided CEASEFIRE! The reason for doing so is that we have already met and exceeded all military objectives, and are very far along with a definitive Agreement concerning long-term PEACE with Iran, and PEACE in the Middle East. We received a 10 point proposal from Iran, and believe it is a workable basis on which to negotiate," Trump said.

He added almost all of the various points of past contention have been agreed to between the United States and Iran, but a two week period will allow the agreement to be finalized and consummated. 

Ease in oil prices
Devarsh Vakil, Head of Prime Research at HDFC Securities noted that WTI Crude Oil tumbled as much as 17 per cent to below $100 per barrel following the ceasefire announcement. Oil, he noted,  had surged above $115 earlier in the session after reports of strikes on Iran's Kharg Island — the hub of roughly 90 per cent of Iran's oil exports — before the diplomatic breakthrough reversed the move.

Oil prices fell as Iranian Minister of Foreign Affairs Seyed Abbas Araghchi said Iran would allow safe passage through the Strait of Hormuz for two weeks, following the request by the US for negotiations based on its 15-point proposal as well as announcement by POTUS about acceptance of the general framework of Iran's 10-point proposal as a basis for negotiation.

Peace talks on Friday

Besides announcing ceasefire, there were also hopes that the first round of negotiations between the US and Iran on an agreement to end the war will take place on Friday in Islamabad. "I warmly welcome the sagacious gesture and extend deepest gratitude to the leadership of both the countries and invite their delegations to Islamabad on Friday, 10th April 2026, to further negotiate for a conclusive agreement to settle all disputes," Shehbaz Sharif, Prime Minister of Pakistan said in a social media post.

Rupee to gain, cap FPI outflows
VK Vijayakumar, Chief Investment Strategist at Geojit Investments said the upside risk to inflation and the downside risk to growth can now be managed well. 

"Rupee will strengthen and this may even force the FPIs to turn buyers; at least they will have to cease the sustained selling, which will become irrational in the present context," he said. 

Nifty, he said can see short covering and may cruise towards 24,000. Further movements will depend on the evolving outlook. "In brief, it is risk on again," he said. 

Asian markets rally
Indian stock market rally has been supported by sharp upmoves in Asia, with Korean Kospi surging 6.24 per cent and Japanese Nikkei 225 gaining 5.14 per cent. Indian market fared better than mainland China and Hong Kong that rose up o 1.9-2.6 per cent. Dow Jones futures climbed 2.2 per cent and hinted at a rally on Wall Street later in the day.

"Global markets have responded positively. Asian equities are trading higher, while a sharp pullback in crude oil prices—now below the $100 mark and trending toward the $91–96 range—offers a meaningful tailwind for India. Lower oil prices help ease inflationary pressures, support the current account, and improve the broader macro outlook," said Ponmudi R, CEO of Enrich Money.

Reasonable valuations
MOFSL in a strategy note said Ponmudi R, CEO of Enrich Money stock market has declined with a similar intensity to other emerging markets (EM) peers post the start of the war, despite underperforming them in 2025. This
suggests that despite the lower absolute and relative valuation, the Indian market is still not a top-down market, and portfolios should be designed on a bottom-up basis with growth visibility, it said.

"Given the current valuation level, where we see limited downside, the upmove will be driven by earnings growth. Consequently, we recommend investing in companies with high earnings growth visibility that have experienced reasonable valuation contraction," MOFSL said in a strategy note.

RBI MPC review: Neutral stance likely
Vakil noted that the RBI's Monetary Policy Committee will wrap up its meeting today and will announce its decision at 10:00 am. Despite concerns over inflation, the market expects the RBI's MPC to maintain the repo rate at 5.25 per cent. He said a neutral stance is likely to persist, balancing global risks such as tensions in West Asia with domestic liquidity support, and avoiding further cuts unless growth falters.