Sensex, Nifty rally: Why stock market is rising today; what analysts say

Domestic benchmarks Sensex and Nifty tracked global cues on Wednesday, after Asian markets surged up to 4 per cent earlier today and Wall Street rallied overnight, as investors bet on an end to the Iran war. The gains were seen as the US President Donald Trump reportedly said the US may wind down its military operations in Iran within three weeks and ​Tehran did not have to make a deal, as a prerequisite to end the war. There were also signs from the Iranian side on ending the conflict.

Analysts noted that the window for de-escalation was narrowing, with Trump’s April 6 deadline approaching. They had warned that if the US escalated the war further and deployed troops on the ground, the initial inflation spike could quickly turn into a growth shock.

On oil prices, Trump reportedly told reporters in the White House's Oval Office: "All I have to do is leave Iran, and we'll be doing that very soon. And they'll tumble down." 

While Brent oil futures for June delivery remained above $105 a barrel level, the BSE Sensex was trading 1,840.63 points or 2.56 per cent higher at Rs 73,788.18. At 9.21 am, Nifty stood at 22,883.75, up 552.35 points or 2.47 per cent.  Wednesday's gains brought much needed respite to domestic benchmarks, which fell over 10 per cent in March, as foreign investors dumped Rs 1,17,775 crore worth shares and rupee tumbled to fresh lows. 

"There are indications of de-escalation of the war from the statements issued by the Iranian authorities. Iranian president’s ‘openness to ending the war’ and confirmation from the Iranian foreign minister that ‘messages were exchanged with the US’ indicate that the war might end soon. This view is getting reflected in declines in crude prices and US bond yields. The market might start discounting de-escalation earlier than the event," said VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited.
 
Nuvama in a note today said the weight of evidence increasingly suggests that markets are approaching a tactical bottom. "Momentum indicators such as RSI drifting toward the 30 zone indicate oversold conditions, while April seasonality remains supportive with 3.5 per cent average returns and a strong 80 per cent hit ratio historically. Positioning data across segments also reflects a meaningful unwind," it said.

The domestic brokerage said downside for Nifty is relatively contained around the 21,800 level, as it sees 4-4.5 per cent rebound a possibility. 

Devarsh Vakil, Head of Prime Research at HDFC Securities said the US President Trump is scheduled to address the American nation on Iran at 7:30 a.m. IST on Thursday, April 2. The address is expected to outline the administration's next steps in its Iran strategy and will be closely watched by markets, said

"Iranian President Pezeshkian has declared that Tehran is prepared to end hostilities with the United States, though it is seeking firm guarantees before doing so," Vakil said.

Despite an improvement in near-term sentiment on hopes of de-escalation in the West Asia and softer crude prices, the broader market backdrop remains volatile and sensitive to risk, said  Ponmudi R, CEO of Enrich Money.