Sensex jumped 1,695 points
Domestic markets rallied sharply on Friday as benchmark Sensex and Nifty recorded their biggest one-day gains in more than two months after oil prices fell amid reports that the US and Iran have reached a tentative deal to end their ongoing conflict.
The Sensex closed 1,695 points or 2.3 per cent higher at 75,528, while the Nifty 50 closed 461 points or 2 per cent higher at 23,623. The gains in both indices were the strongest since April 8.
Friday’s rally also helped the benchmark break a two-week losing streak. During the week, Sensex rose 1.73 per cent and Nifty rose 1.1 per cent. The market capitalization of BSE-listed companies increased from ₹9.6 trillion to ₹462 trillion.
Investor sentiment improved after reports that Washington and Tehran could sign an interim peace deal over the weekend. The proposed deal is expected to include reopening the Strait of Hormuz, a vital shipping route through which about a fifth of the world’s oil supply passes.
The strait was closed due to the US-Iran conflict, triggering one of the most serious energy shocks in recent years. Brent crude prices fell sharply overnight and were trading around $87.3 a barrel on Friday. Despite the decline, crude remains about 18 percent above pre-war levels.
The conflict had also accelerated foreign selling in Indian equities and put pressure on the rupee, which has declined 4.35 percent since the outbreak of hostilities. During the same period, Sensex and Nifty have declined by 7.1 percent and 6.2 percent respectively.
“Until there is a formally signed agreement and clarity after the proposed 60-day talks on nuclear issues, I do not expect foreign investors to return in a meaningful way. Till then, the best outcome will be a reduction in selling pressure,” said UR Bhat, co-founder of Alphanity Fintech.
“The market was looking for a respite from uncertainty and it got it during trading hours. However, investors will closely examine the details over the weekend. On Monday, we will know whether the rally is sustained or whether the doubts return and negate some of the gains,” he said.
Market breadth remained strong with 3,155 shares rising against 1,119 decline on the BSE. HDFC Bank, which gained 3.7 per cent, was the biggest contributor to the Sensex rise, followed by Larsen & Toubro, which climbed 4.9 per cent.
“Immediate resistance for Nifty is placed at 23,770-23,800 zone. A sustained move above this range could lead to a pullback towards 23,950 and then 24,100. On the downside, immediate support is placed at 23,470-23,450,” said Sudeep Shah, Head of Technical and Derivatives Research at SBI Securities.
Foreign portfolio investors remained net sellers and sold shares worth Rs 1,082 crore on Friday. Meanwhile, domestic institutional investors were net buyers worth Rs 5,341 crore.
