War impact on stock market over, Sensex jumps 11000 points, still any risk?

After months of constant selling and investor woes, Dalal Street has made a brilliant comeback. This has pushed the Sensex to the levels it was seen before the conflict in the Middle East started in late February. On Wednesday, the Sensex briefly crossed 82,200. This is the first time this has happened since the war began in late February. From its 52-week low hit last month, the index has now jumped 11,000 points. On Thursday too, the index remained at pre-war levels. This has come as a major relief to investors who were reeling from the heavy sell-off that began in early March this year.

Sensex and Nifty fall sharply after the start of Middle East war

The stock market closed on the last Saturday of February, when news broke that Iran’s Supreme Leader Ayatollah Ali Khamenei had been killed in a joint US-Israeli airstrike. Analysts sounded the alarm even before Dalal Street opened and their warning proved correct. This was followed by a deepening of the conflict in the Middle East, which continues to this day. The ‘Strait of Hormuz’ was closed due to rising tensions.

This is a very important waterway, through which more than 20 percent of the world’s oil supply passed at the time. As a result, oil prices rose to over $120 per barrel. After China, India is the second largest oil importing country in the world and is largely dependent on crude oil imports.

In March 2026 alone, the Sensex fell by around 9,340 points, while the Nifty lost 2,500 points. Over the next few months, the stock market saw a slight recovery as the frenzy surrounding AI (artificial intelligence) began to die down. Analysts pointed out that India could benefit from anti-AI. Some temporary peace agreements in the middle of the Middle East conflict also boosted the market.

However, the bullish trend in the market could not be sustained. Many new challenges have arisen. The Middle East war increased inflationary pressures, leading to a period of rising interest rates around the world. Bond yields are at multi-decade highs, while foreign institutional investors (FIIs) sold Indian stocks heavily. Against this backdrop, the Sensex hit a 52-week low of 71,293 and the Nifty fell to 22,180 in early October.

Huge comeback in Sensex and Nifty

The Indian stock market has seen a spectacular recovery since mid-October and the rise accelerated in November. Softening crude oil prices and appreciating rupee have helped, but the biggest reason has been the strong return of FIIs (foreign institutional investors).

In the first 10 months of the year 2026, Rs. Foreign investors have now increased their buying of Indian stocks significantly after a massive sell-off of Rs 2.95 lakh crore. On Wednesday, FIIs invested Rs. 12,563 crore worth of Indian stocks, taking his total purchases in November to Rs. 69,000 crores. This figure also surpassed the previous monthly record of December 2023 (Rs 66,135 crore).

However, domestic investors – who remained the mainstay of the Indian market even during the sustained FII sell-off earlier this year – have recently been selling Indian stocks heavily. Many analysts believe that this may be due to ‘profit booking’ (profit booking). Their institutional investors are now benefiting from the massive buying done in Indian stocks during the last selloff.

Analysts also say that the better-than-expected Q2 (second quarter) results of Indian companies (India Inc.) is another major factor bolstering market sentiment. VK Vijayakumar, chief investment strategist at Geojit Investments, said earnings of Nifty 50 companies rose nearly 24 percent in Q2, the highest in the last 12 quarters. Due to this the ‘Forward PE’ (Valuation Ratio) of Nifty 50 has come to a reasonable level. During the July-September quarter of the current financial year, around 181 companies reported at least two-fold increase in their net profit compared to the previous year.

What’s next for Dalal Street?

The boom in the market has been quite spectacular, yet caution is warranted. Crude oil prices are still volatile and sensitive to statements from US President Donald Trump and Iran’s leaders. Even earlier, due to his sharp statements, the market saw huge ups and downs. Goldman Sachs recently raised its forecast for crude oil prices, citing rising risks to global supply.

The investment bank has warned that Brent crude could reach $140 a barrel by 2027 if crude oil production in the Gulf region remains well below average in 2025. Analysts at JP Morgan also pointed to the uncertainty associated with the conflict, saying it was difficult to predict what form the war would take in the future.

According to VK Vijayakumar, Chief Investment Strategist, Geojit Investments, Nifty’s rise of around 10 per cent over the seven trading sessions so far in November is mainly due to aggressive buying by FIIs (Foreign Institutional Investors). He said that till November, in the ongoing tug-of-war between FIIs and DIIs (domestic institutional investors), FIIs were selling while DIIs were buying. Now the situation is completely reversed. FIIs have become aggressive buyers, while DIIs have continued to sell. The analyst believes that this position of FIIs and DIIs will determine the market trend in the near future.

Vijayakumar said that this trend of buying by FIIs is likely to continue further and may reach an all-time high. He said strong earnings growth reflected by strong Q2 results and lower crude oil prices (Brent crude around $92) will support this market rally. At the same time, profit booking by DIIs may continue, which may put a check on this bullishness.