Sensex, Nifty climb in opening trade: Why stock market is rising

Indian equity benchmarks opened higher in Tuesday's trade, pausing a sharp two-session decline, as easing crude oil prices and buying in key sectors lifted investor sentiment.

The rebound comes after Brent crude cooled to around $89 per barrel, sharply lower from its near $120 peak in the previous session amid tensions in West Asia involving Iran, the US and Israel.

Early gains were broad-based select sectors. Banking, financial, automobile, pharma and metal stocks saw buying interest, while the broader market also mirrored the strength in the benchmark indices.

Dharmesh Kant, Head of Equity Research at Cholamandalam Securities, believes the market could remain volatile in the near term but sees opportunities emerging in select sectors.

"There are certain sectors that were largely insulated from developments in the Middle East but still got hammered due to the conflict. I believe this is a good opportunity for investors to enter them. These sectors include banking, metals and automobiles. Defence also remains attractive, as it is a structural story in the making," he told Business Today.

Ponmudi R, CEO at Enrich Money, noted that remarks from US President Donald Trump indicating that the US–Israel conflict with Iran may conclude soon have led to a drop in crude oil prices, thereby helping revive risk appetite across global markets.

Echoing a similar view, Kranthi Bathini, Equity Strategist at WealthMills Securities, said, "A correction in crude from its recent peak of $120 per barrel has brought some positivity to the market. We are witnessing a bit of a bounce-back and some bottom fishing. Going ahead, it will be important to see whether the current levels can sustain."

VK Vijayakumar, Chief Investment Strategist at Geojit Investments, said, "Extreme volatility in crude prices has triggered heightened volatility in stock markets, too, across the world. The panic reaction in crude prices, which took the Brent crude to near $120 yesterday, has seen a reversal this morning, plunging Brent crude to $89. This kind of extreme swing of nearly $30 in one day is reflective of the huge uncertainty surrounding the impact of the West Asian conflict on global crude supplies. During a war, uncertainty reigns supreme, and this is what we are witnessing now. Unexpected developments can again impact crude prices and thereby stock markets, too."

He added, "The lesson from history is that geopolitical issues like wars will have only a short-term impact on the economy and markets. Therefore, investors should remain invested and continue with systematic investment. Another lesson from experts is that crises are opportunities to buy for investors who are not risk-averse."

Vijayakumar further stated, "The correction in the market has made stock prices, particularly of largecaps. Sectors like financials, automobiles, pharmaceuticals and defence have good prospects."