When the stock markets opened in the morning after the announcement of ceasefire in the Middle East, a historic rise was seen in the Sensex and Nifty. Where Sensex and Nifty saw a rise of 4 percent. On the other hand, there was a tremendous rise in the shares of many companies. There was a tremendous increase in the shares of Reliance Industries and Adani Group. The special thing is that the stock market has seen a rise for the 5th consecutive day on Wednesday. In these five days, an increase of about 8 percent has been seen in the stock market. Due to which stock market investors have gained a profit of more than Rs 33 lakh crore. Let us also tell you what kind of figures have been seen in the stock market.
Tremendous rise in stock market
The Indian stock market witnessed strong buying on Wednesday (April 8), due to which the benchmark indices – Sensex and Nifty 50 – closed with a gain of about 4 per cent. Sensex closed at 77,562.90 with a gain of 2,946 points or 3.95 per cent, while Nifty 50 closed at 23,997.35 with a gain of 874 points or 3.78 per cent. Both Nifty Midcap 100 and Nifty Smallcap 100 indices saw a rise of more than 4%.
Volatility index India VIX fell by more than 20 percent and came below the level of 20, which is a sign of reduction in market nervousness. Talking about sectoral indices, Nifty Bank and Financial Services rose by about 6%, while Realty and Auto indices saw a rise of up to 7%. The total market capitalization of companies listed on BSE increased from ₹ 429 lakh crore in the previous session to ₹ 446 lakh crore, resulting in an increase of investors’ wealth by ₹ 17 lakh crore.
8 percent increase in 5 days
There has been a rise in the stock market for 5 consecutive days. If we look at the data, the main index Sensex of Bombay Stock Exchange closed at 71,947.55 points on March 30. From then till now it has seen an increase of 5,615.35 points. This means that in this month the Sensex has given an income of 7.80 percent to the investors. If we talk about Nifty, the main index of the National Stock Exchange, it has also seen a rise of 7.46 percent in 5 trading days. On March 30, Nifty closed at 22,331.40 points, which has seen a rise of 1,665.95 points since then.
Why did the stock market rise today?
US-Iran ceasefire
US President Donald Trump has announced that Washington will stop military action against Iran for two weeks. Iran has also accepted this ceasefire plan. Apart from this, talks between US and Iran will start in Islamabad on Friday. The market is hopeful that a final announcement regarding the end of the West Asian war may be made in the coming days. VK Vijayakumar, Chief Investment Strategist, Geojit Investments, said that the two-week ceasefire between the US and Iran has changed the near-term market environment to a great extent. After the ceasefire, the market is expected to rise again due to the huge fall in the prices of Brent crude (which fell to $95). This ceasefire, and especially the agreement on reopening of the Strait of Hormuz, will give the ‘bulls’ the courage to be active again, and the right market valuations will help them in this.
Huge fall in crude oil prices
There was a huge fall of 14 percent in the prices of Brent crude and they fell below $ 95 per barrel. This created a positive atmosphere in the stock market, because there was hope that the supply of crude oil through the Strait of Hormuz could resume soon without any interruption. This fall in crude oil prices is a big relief for the Indian economy and stock market. A sustained fall in crude oil prices could improve the growth prospects of the Indian economy, strengthen the currency, and also increase the possibilities of foreign capital inflows.
Dollar fell more than 1 percent, rupee strengthened
Due to sharp fall in crude oil prices and easing geopolitical tensions, the dollar index fell by more than 1% to 98.69. Meanwhile, the Indian rupee strengthened further in early trade on Wednesday, which also affected the domestic market environment. The rupee rose by 50 paise to 92.56 against the US dollar in early trade on Wednesday after the US and Iran agreed on a two-week ceasefire. Weak dollar and strong rupee may prompt foreign portfolio investors to change their view towards Indian stocks. Vijayakumar said that the rupee will strengthen further, and this may lead to FPIs (foreign portfolio investors) becoming buyers again. At least they will have to stop continuous selling, because in the current circumstances it would not be logical to continue selling.
Positive signs at global level
The positive signals received at the global level also had an impact on the domestic market environment. After the announcement of ceasefire between US and Iran, major Asian markets like Korea’s Kospi and Japan’s Nikkei saw a rise of up to 6 percent. According to Bloomberg, strategists believe that the ceasefire between the US and Iran has brought relief to Asian markets, although the market may continue to be volatile due to lack of clear information about the agreement and concerns over the Strait of Hormuz.
RBI did not change the repo rate
The Reserve Bank of India (RBI) did not give any shocking news to the market and kept the repo rate unchanged at 5.25 percent and maintained its policy stance as ‘neutral’. IndiaFirst Life Chief Investment Officer Poonam Tandon said that MPC has kept the rates unchanged as per expectations. Given the ongoing crisis in West Asia, the MPC is likely to rely on data in the future and will be helpful in providing liquidity. It is expected that the policy will remain on pause with a neutral stance. Therefore, this policy is supportive for growth, equity and bond markets.