Why Sensex, Nifty are rising today: Key factors driving the market surge

Indian equity benchmarks continued to climb in Wednesday's trading session, amid hopes of easing geopolitical tensions in the US-Israel-Iran conflict. At last check, the 30-share BSE Sensex pack surged 953.15 points or 1.29 per cent to 75,021.60, while the NSE Nifty index climbed 304.80 points or 1.33 per cent to 23,217.20.

The upmove was led by gains in heavyweight stocks such as HDFC Bank Ltd, ICICI Bank Ltd, Larsen & Toubro (L&T), Axis Bank Ltd, Mahindra & Mahindra Ltd (M&M), State Bank of India (SBI), Bajaj Finance Ltd, Kotak Mahindra Bank Ltd, ITC Ltd and Reliance Industries Ltd (RIL), which lifted the benchmarks higher.

Buying interest remained largely broad-based across sectors, with auto, banking, financial services, metals, pharma, realty, energy and consumer stocks witnessing strong traction. Technology stocks, however, traded lower. The broader market also remained in positive territory, with Nifty Midcap 100 rising 2.01 per cent and Nifty Smallcap 100 advancing 2.31 per cent.

The rebound added over Rs 7.6 lakh crore to investor wealth during the opening trade. The BSE's total market capitalisation (m-cap) increased by Rs 7.65 lakh crore to Rs 430.43 lakh crore, compared with Rs 422.78 lakh crore in the previous session.

"Market is rising due to the correction in oil prices and easing tensions in West Asia. The decline in oil prices is a key positive for the Indian market in the short to medium term. However, it remains to be seen how decisively the market sustains this rally. Overall, the medium-term outlook is likely to remain volatile, with sentiment-driven news currently guiding market movements," noted Kranthi Bathini, Equity Strategist at WealthMills Securities.

"Hope is returning to the market with indications of de-escalation in the conflict. Remarks from President Trump and from the Iranian regime indicate that the conflict might end soon. Particularly the reiteration from Iran that 'non-hostile ships can transit the Strait of Hormuz' is good news that will mitigate India’s energy concerns," said VK Vijayakumar, Chief Investment Strategist at Geojit Investments.

Crude oil prices dropped on reports that the US is seeking a month-long ceasefire in its war with Iran and has presented Tehran with a 15-point plan. "These positive geopolitical developments have reflected in sharp decline in Brent crude to around $98. The US 10-year yield also has declined. Gold has recovered. If this positive development sustains, there is room for a sharp rebound in the market. But if the recovery is to sustain FIIs should stop their big sustained selling, which, in turn, will require stability in the rupee. Yesterday’s 399 point recovery in Nifty was caused more by short covering," Vijayakumar stated.

He believes that mid- and small-cap stocks may rebound more than large caps in the near term, as there is limited concern of significant FII selling in this segment.