Sensex, Nifty surge for 3rd straight day on geopolitical relief, cooling crude

Indian equity markets extended their upmove for the third straight session on Thursday, lifted by easing geopolitical tensions and a continued decline in global crude oil prices.

Last checked, the BSE Sensex surged 612 points or 0.74 per cent to 83,367, while the NSE Nifty gained 156 points or 0.62 per cent to trade at 25,401. Investor wealth, as suggested by the BSE market capitalisation (m-cap), rose Rs 1.71 lakh crore to Rs 455.72 lakh crore compared with a valuation of Rs 454.01 lakh crore recorded in the previous session.

The positive sentiment was largely driven by a ceasefire between Israel and Iran, which has calmed nerves across global markets. This truce has triggered a risk-on environment, bolstering investor appetite for equities. However, concerns remain about unresolved global trade tensions, particularly with the United States.

"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," said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

Vijayakumar highlighted July 9 as a crucial date when the 90-day pause on reciprocal tariffs expires. "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."

On the valuation front, Vijayakumar noted that Indian equities are trading at stretched levels, with the Nifty priced at over 22 times projected FY26 earnings. "This makes the market vulnerable to foreign institutional investor (FII) selling. However, domestic institutional investors (DIIs), with ample liquidity, are likely to cushion any downside pressure from FII outflows."

Crude oil prices, a major macro trigger for India, have eased significantly. Brent crude, which spiked to $79.40 a barrel on June 23 amid Middle East tensions, has since dropped over 15 per cent. As of Thursday, September Brent futures were trading at $66.76 per barrel, nearly 16 per cent below their recent high.

The decline reflects reduced concerns over potential supply disruptions, especially fears that Iran might block the Strait of Hormuz -- a key route for global oil trade -- which now appear less likely 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.

A Reserve Bank of India (RBI) article noted that despite heightened geopolitical and trade uncertainties, the Indian economy has displayed considerable resilience.