The Sensex and the Nifty posted strong gains on June 20 despite escalating tensions between Israel and Iran.
The Sensex opened at 81,354.85 against its previous close of 81,361.87 and surged 1,133 points, or 1.4 percent, to an intraday high of 82,494.49. Meanwhile, the Nifty 50 opened at 24,787.65 against its previous close of 24,793.25 and climbed 1.4 percent to an intraday high of 25,136.20.
By the close, the Sensex ended 1,046 points, or 1.29 percent, higher at 82,408.17, while the Nifty 50 settled at 25,112.40, up 319 points, or 1.29 percent.
The BSE Midcap index advanced 1.20 percent, while the Smallcap index rose 0.55 percent.
The total market capitalisation of BSE-listed companies increased to nearly ₹448 lakh crore from ₹443 lakh crore in the previous session, adding about ₹5 lakh crore to investor wealth in a single day.
The Indian stock market witnessed robust buying across sectors. Three key factors appear to have driven the rally:
1. Short covering after recent fall
Experts noted that the rebound was along expected lines, as the market had been subdued for the past three sessions. With a positive outlook for the Indian economy, investors were likely buying at attractive valuations.
“Investors may be covering short positions on hopes of a truce between Israel and Iran. However, if tensions escalate further, the market could face renewed selling pressure,” said Avinash Gorakshkar, a SEBI-registered fundamental research analyst.
Brent crude prices dropped over 2 percent, bolstering sentiment in the domestic market. Despite heightened conflict in West Asia, crude prices declined on profit-booking amid uncertainty over the US decision on joining the Israel-Iran conflict.
Benchmark Brent crude prices slipped to below $77 per barrel. Analysts observed that as long as crude remains under the $80 mark, it is unlikely to exert a negative influence on Indian equities.
Foreign portfolio investors (FPIs) have resumed buying Indian equities, driven by a weakening dollar index. On June 19, FPIs made net purchases worth ₹934.62 crore in the cash segment.
With India's macroeconomic outlook staying strong, experts believe foreign investors are eyeing reasonably valued segments of the market following the recent correction.
Analysts said the market is trading in a range, and a breakout either way will determine its trajectory.
“The outlook remains positive, and a decisive move above 25,200 on the Nifty would mark the end of the ongoing five-week consolidation phase, paving the way for a rally towards the 25,600–25,800 zone. In the absence of any major domestic triggers, global cues will continue to guide sentiment,” said Ajit Mishra of Religare Broking.
Rupak De of LKP Securities said the index has reclaimed the 21-day EMA, which could provide further momentum for an upward move.
“Support is now placed at 24,850. The index remains a ‘buy on dips’ candidate as long as it holds above this level. On the upside, it may head towards 25,350 and beyond,” he added.
