Why are markets rising today? Sensex settles 400 pts higher, Nifty gains for 2nd day. 4 factors behind the surge
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ETMarkets.comAt around 10:30 AM, the Sensex rose above 450 points to 74,751, while the Nifty gained over 100 points to trade near the 23,150 level. From the day's low, the Sensex had recovered more than 700 points to reach 74,775. The rebound follows a 1,500-point rally on Wednesday.
Among Sensex constituents, Tech Mahindra, Infosys, TCS, Bharti Airtel, Mahindra & Mahindra and HCL Technologies led the gains, rising as much as 7%. On the other hand, Reliance Industries, Hindustan Unilever, ITC, ICICI Bank and BEL declined around 1%.
Why is the stock market rallying today?
1) IT stocks extend gains for a fourth session
IT stocks, including TCS, Tech Mahindra, Infosys and HCL Technologies, rose as much as 8% on Friday, lifting the sectoral index by more than 3% and pushing its weekly gains into double digits. The rally follows stronger earnings and a selloff in AI-linked stocks.VK Vijayakumar, chief investment strategist at Geojit Investments, said strong results from major IT companies and positive management commentary had triggered a sharp recovery in the IT index, helping the Nifty remain resilient. He added that the improvement could provide fundamental support to the broader market.
2) Cooling bond yields
Another positive development is the sharp decline in the US10-year bond yield to 5.07%. Falling US bond yields can support Indian equities by making emerging markets such as India more attractive to foreign investors. When yields on US Treasury bonds decline, the appeal of relatively riskier assets, including Indian stocks, can improve, potentially encouraging foreign portfolio investors (FPIs) to increase their exposure to Indian markets.3) Oil prices ease
Despite simmering tensions and attacks on energy infrastructure, Brent crude prices dipped half a percent amid chances of US easing restrictions on the world's so-called shadow fleet of tankers to temper liquid gold prices.The shadow fleet is a group of oil tankers used to transport oil from countries facing sanctions, particularly Russia, Iran and Venezuela, often outside the conventional Western shipping, insurance and regulatory system.
According to a Reuters report, the Trump administration is considering lifting sanctions on some so-called shadow fleet vessels that have transported oil and petroleum products from countries including Russia, Iran and Venezuela. The move is aimed at bringing down global freight rates, which have reached record highs.
Experts, however, say FII selling could likely persist as long as yields remain above 5% and oil above $100 per barrel.
4) Rupee gains for 5th day
The rupee strengthened 0.2% to 94.83 against the US dollar, extending its winning streak to a fifth consecutive session, supported by position adjustments in the non-deliverable forwards (NDF) market.Experts said that the rupee is strengthening, as offshore traders reduce bearish bets and the RBI continues to sell dollars, supported by curbs on hedging activity and the special dollar window for oil companies. “The near-term bias for USD/INR remains cautiously bearish, with a sustained move back above 94.90–95 needed to stabilise the pair. A decisive break below 94.40–94.50 could open the way toward 94.08,” Ponmudi R, CEO of Enrich Money, said.