The Indian stock market saw a sharp rally on Thursday, with the Sensex and Nifty jumping around 2%. The Democrats’ lead in the US midterm elections (which is a blow for Trump), softening crude oil prices and other positive signs triggered a new round of bullishness on Dalal Street, further extending the market’s recovery this week.
The Sensex surged over 1,700 points to cross the 79,000-point mark. While Nifty 50 has seen a jump of around 500 points. Due to which the Nifty once again surged over 100 percent and crossed the 24,442 level. Due to this massive increase, the total market capitalization of all the companies listed on BSE rose to Rs. 8 lakh crore has increased, taking it to Rs. 501 has taken to lakh crore.
Shares of Indigo led the Sensex with gains of over 6%. Apart from this, shares of Maruti Suzuki, Asian Paints, Bajaj Finance, M&M, L&T, Ultratech Cement, HDFC Bank, Axis Bank, Bajaj Finserv, ICICI Bank, TCS, Infosys and HCL Technology have registered gains of 2-4%.
The broader market was also bullish, with the Nifty Midcap 100 and Nifty Smallcap 250 indices rising up to 1.5%. Meanwhile, the India VIX, which measures market volatility, fell 2.5% to below the 15 level.
Talking about the sectoral indices, Nifty Auto, Nifty Financial Services and Nifty Realty gained more than 2%, while Nifty Pharma closed in the red (with losses). The overall market trend was bullish; On the NSE, 2,468 stocks advanced, while 313 stocks declined. At the same time, there was no change in the price of 55 shares.
Oil prices have fallen below $95 per barrel
Perhaps the biggest factor fueling the ongoing bullishness on Dalal Street is the steep drop in crude oil prices. After several weeks, prices fell below the important psychological level of $100 per barrel and then fell further to break the level of $95 per barrel. On Thursday morning, Brent crude futures were trading below $94 per barrel and WTI crude futures were trading below $87 per barrel. Oil prices have fallen by around 10% compared to the previous day.
The Middle East war may be over
US President Donald Trump’s Republican Party has lost control of both houses of Congress – the Senate and the House of Representatives. All this happened when the war in Iran caused a sharp rise in energy prices, which began to take a heavy toll on the wallets of the American people. In a lengthy post following the election loss, Vice President JD Vance acknowledged that the Republican Party had performed poorly because of voter anger over the war and US-Israel relations. At the same time, Senate Minority Leader and Democrat Chuck Schumer promised to end the war soon.
This has rekindled hopes for an end to the conflict in the Middle East. The conflict began in late February this year, when the US and Israel launched a joint military attack on Iran. The attacks, which killed Iran’s former supreme leader, sent oil prices soaring and panicked global stock markets.
A fall in bond yields
Bond yields have also fallen after the sharp drop in oil prices. The yield on 30-year US Treasury notes fell to 5.2%, while that on the benchmark 10-year note fell to 4.8%. The yield on the 2-year US bond, which fluctuates with expectations about the Fed’s (US central bank) interest rate decisions, also fell to 4.5%.
Bond yields and bond prices move inversely. Falling oil prices caused investors to buy bonds, causing bond yields to fall. Falling bond yields are generally considered positive for the stock market, as they create stocks that are riskier but offer more attractive returns to investors than the debt market (bond market).
Rupee hits 2-week high
The rupee opened at a two-week high. It rose 0.3% to 94.35 against the US dollar. This has happened due to the fall in oil prices. Going forward, continued foreign fund inflows and a weaker dollar could provide further support to the rupee, keeping his outlook towards the 94.50 level positive, said Jatin Trivedi, VP Research Analyst, Commodities and Currencies, LKP Securities.
Concerns eased over Trump’s tariff stance
The resounding victory of the Democrats in the Congress (US Parliament) has raised hopes of stopping the frequent arbitrary decisions of US President Donald Trump. Trump’s defeat in the midterm elections could significantly reduce pressure on New Delhi to negotiate a balanced trade deal with Washington, experts say.
According to experts, this setback to Trump’s second term – in which Democrats have control of both the House and Senate – could provide greater clarity on tariff and market access issues going forward. This can help boost India’s exports to the US.
